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JOINT  LETTER 


TO 


HOIST.  H.  J.  JEWETT, 


Beceiver  Erie  Railway  Company, 


IN  ANSWER  TO 


ALLEGATIONS  MADE  IN  THE  COMPLAINT  OF  CHARLES 
POTTER  AND  OTHERS 


* 

*!• 


IN  THE 


Supreme  Court  of  the  State  of  New  York. 


'4  m..  . 


VISA 

£su  4  3b 


Hon.  H.  J.  Jewett,  Receiver: — 

Dear  Sir: 

THE  complaint  of  Charles  Potter  and  others,  against  “the  Receiver, 
the  Erie  Railway  Company,  and  others,”  entered  in  the  Supreme 
Court  of  this  state,  January  17th,  1878,  contains  grave  charges  against  the 
ability  and  integrity  of  your  administration  as  Receiver,  which  embrace 
the  most  unjust  statements  of  figures  and  perversion  of  facts  that  could 
be  combined  to  make  mere  assertions  appear  plausible.  Knowing  that 
the  formal  limitations  of  a  legal  answer  preclude  the  completeness  of 
detail  required  for  the  justification  of  your  administration,  the  under¬ 
signed  have  thought  it  just  and  proper  to  make  a  specific  reply  to  each 
of  the  charges  of  the  complaint  that  relate  to  the  traffic,  transportation, 
and  accounting  departments. 

Our  positions  near  you  have  made  us  necessarily  and  fully  acquainted 
with  the  details  of  your  management,  and  we  pledge  our  reputations 
for  intelligence  and  probity  to  the  correctness  of  the  answers  herewith 
submitted: — 

The  complaint  says  (page  10,  section  4,  folios  40,  43.  44):- — 

“  That  the  Erie  Railway  Company  was,  on  and  before  the  lJffh  of  July,  187 1+, 
“and  at  all  times  thereafter,  until  and  including  the  26th  of  May,  1875,  in 
“good  condition  as  to  its  property. 

“  That  during  all  the  time  aforesaid,  and  ever  since  then,  the  proportion  of 
“  expense  to  gross  earnings  was  much  less,  and  the  ^proportion  of  profit  to  gross 
“  earnings  much  greater,  in  the  business  of  the  rival  and  competing  lines,  of  the 
“  New  York  Central,  the  Baltimore  and  Ohio,  and  the  Pennsylvania  railroads; 
“  and  that  the  exercise  of  ordinary  economy  and  honesty  would  have  largely 
J  “  diminished  the  expense  and  increased  the  profits  of  the  said  period  in  the 


“  business  of  the  said  Erie  Railway. 

“  That  the  said  Erie  Railway  is  fidly  supplied  with  the  usual  and  proper 


“  equipment  and  facilities  for  handling  the  traffic  which  is  offered  it  with  econ- 
“  omy  and  dispatch,  and  that,  judged  by  the  traffic,  resources,  and  earnings  of 
“  either  of  the  other  three  main  trunk  lines  with  which  it  competes  for  business, 
“  in  any  year  when  the  transportation  charges  it  receives  are  fairly  proportioned 


7  “  to  the  service  performed,  it  has  the  ability  to  pay  interest  on  its  entire  bonded 
cT  “debt,  improve  its  material  condition,  and  ultimately  yield  dividends  to  its 


**  “  stockholders.” 

It  is  farther  alleged  (page  53,  section  17,  folios  212  to  217,  inclusive): — 


“  That  the  management  of  the  said  Jewett  has  been  incompetent,  improvident, 
“  and  extravagant  in  the  enormous  expense  at  which  he  has  conducted  the  busi- 
“  ness  of  the  said  Railway. 


(3) 


726629 


4 


u  That  the  annual  expense  of  operating  the  said  Railway  has  been,  during  the 
“  whole  term  of  the  said  receivership,  at  least  $5,000,000  more  than  under 
“  proper  and  competent  and  honest  management  it  should  and  would  have 
“been;  that  the  said  Jewett  has  kept  and  paid  in  the  service  of  the  said  Com- 
“  pany  several  thousands  of  unnecessary  and  useless  employes.  That  up  to 
“  April  1st,  1877,  the  said  Receiver  has  paid  to  clerks  and  employes  and  labor- 
“  ers  $lj,j20,072.66;  that  the  rates  of  compensation  paid  to  the  said  clerks, 
“  employes,  and  laborers  were  at  least  20  per  cent,  more  than  the  said  services 
“  were  reasonably  worth,  and  more  than  other  competing  trunk  railroads  were 
“  at  the  same  time  paying  for  similar  services,  and  that  by  such  payments  alone 
“the  property  of  the  said  Company  was  wasted,  impaired,  and  diminished  to 
“  at  least  the  extent  of  $2,881f,011f.32;  that  during  the  whole  term  of  his  said 
“  receivership  said  Jewett  has  paid  extravagant  and  excessive  salaries  to  his 
“general  and  division  superintendents,  the  station  agents  and  clerks,  and  that 
“  the  loss,  waste,  and  misappropriation  of  the  trust  funds  in  the  hands  of  the 
“  said  Receiver  by  such  excessive  payments  has  been  in  excess  of  $ 500,000  a 
“  year;  that  the  said  Jewett,  during  all  the  term  of  his  receivership,  has  in- 
“  curred  and  paid  extravagant  and  excessive  expense  for  the  maintenance  of 
“  way,  and  motive  power  and  equipments,  for  agencies,  clerks,  and  superin- 
“  tendents,  and  for  the  receiving,  handling,  and  delivery  of  freight,  and  that  the 
“  annual  waste  and  loss  of  the  earnings  of  the  road  thereby  has  been  not  less 
“  than  $ 3,700,000 . 

“  That  the  said  Jewett  well  knew  that  the  payments  and  expenses  aforesaid 
“were  extravagant  and  excessive.  That  a  ready  and  convenient  standard  by 
“which  to  judge  of  the  proper  and  necessary  expense  in  the  management  of  the 
“  said  Erie  Railway  was  furnished  and  known  to  him,  in  the  payments  and 
“  expense  of  the  New  York  Central  Railroad  Company,  the  Pennsylvania  Rail- 
“  road  Company,  and  the  Baltimore  and  Ohio  Railroad  Company,  with  all  of 
“  which  he  was  familiar,  as  the  plaintiffs  are  informed  and  believe,  and  all  of 
“  which  were  and  are  competing  trunk  lines  transacting  a  business  similar  to 
“that  of  the  Erie  Railway  Company .” 

The  complaint  then  proceeds,  upon  these  mere  assertions,  to  make 
comparisons  of  the  results  of  the  management  of  this  railway  with  other 
trunk  lines,  in  figures  which  are  stated  and  answered  on  the  22d  page 
hereof. 

Stripped  of  verbiage,  the  foregoing  charges  are: — 

First.  “  That,  May  26th,  1875,  the  Erie  Railway  was  in  good  condition  as 
“  to  its  property .” 

Therefore, 

Second.  “  That  it  has  the  ability  to  earn  its  entire  interest,  improve  its 
“material  condition,  and  ultimately  yield  dividends  to  its  stockholders .” 

Because, 

Third.  “  It  is  fully  supplied  with  the  usual  and  proper  equipment  and 
“facilities,  and  could,  therefore,  handle  its  traffic  with  economy  and  dispatch; 
and, 

Fourth.  Supports  for  these  bald  assertions  are  sought  in  so-called  com- 


5 


parisons  with  the  results  on  the  New  York  Central,  the  Pennsylvania,  and  the 
Baltimore  and  Ohio  railroads. 

These  general  charges  are  supplemented  by  others  relating  to  specific 
nontracts,  agreements,  etc.,  the  whole  being  relied  upon  in  the  attempt 
to  enforce  the  conclusion  that  the  income  is  fraudulently  and  incompe¬ 
tently  lessened,  which,  added  to  wasteful  expense,  produce  the  climax 
of  alleged  mismanagement  from  which  the  complaint  seeks  relief. 

We  answer  each  of  the  foregoing  charges  in  the  same  order. 

First.  “  That  the  property  was  in  good  condition  May  26th,  1875.” 

Compared  with  its  condition  when  you  became  president,  it  had  been 
but  little  improved  at  that  date,  as  less  than  a  year  had  elapsed,  during 
which  it  was  impossible,  with  the  complications  forced  upon  you  by  the 
proposed  lease  of  the  Atlantic  and  Great  Western  Railway  and  other 
intricate  matters,  to  learn  the  needs  and  efficiently  reorganize  the 
service  of  so  extended  and  complicated  an  estate. 

We  regret  to  assert  that  its  condition  was  not  good  in  the  following 
leading  particulars: — 

A.  Its  power  and  cars  were  insufficient  in  number,  and  defective  in 
■condition,  because  usual  depreciation  had  not  been  made  good  by  repairs 
or  construction,  and  condemned  locomotives  and  cars  destroyed  had  not 
been  replaced,  thus  requiring  unusual  outlays  for  repairs  and  renewals. 

B.  The  various  ages,  patterns,  and  sizes  of  locomotives  and  cars  were 
•serious  drawbacks  in  attaining  or  maintaining  the  perfection  in  their 
condition  upon  this  line,  which  the  ample  equipments,  uniform  standards, 
.and  thorough  maintenance  of  the  rolling  stock  of  our  rivals  had  enabled 
them  to  secure  and  preserve. 

C.  The  wear  and  tear  of  locomotives  and  cars  was  greater  upon  this 
line,  because  it  was  laid  mostly  with  iron  rails,  much  of  which  required 
renewal;  upon  a  roadway  largely  of  single  track;  and  with  higher  grades 
and  sharper  curvature,  in  comparison  with  the  smooth  double  steel 
tracks,  more  favorable  grades,  and  straighter  lines  of  its  competitors. 

D.  Our  engines  could  not  be  maintained  in  the  condition  of  those  of 
other  lines,  because  our  round-houses  were  inadequate  to  accommodate 
them,  entailing  the  two-fold  expense  of  exposure  to  the  elements,  and 
keeping  up  fires  in  the  locomotives  in  cold  weather  to  prevent  them 
from  freezing. 

E.  These  drawbacks  were  intensified  by  lack  of  equipments  and  by 
.a  growing  tonnage,  which,  acting  jointly,  necessitated  constant  use  of 
power  and  cars,  and,  therefore,  limited  the  opportunities  for  their 
proper  care. 

When  repairs  could  no  longer  be  deferred,  they  were  expensively 
made,  as  the  shops  were  inadequate  in  size  and  number,  and  lacked  the 
improved  machinery  and  economical  appliances  for  utilizing  material 
and  labor  which  our  rivals  possessed. 


6 


F.  Our  passenger  and  freight  buildings  were  inadequate  in  number,, 
convenience,  capacity,  and  condition.  The  same  was  true  as  to  the 
docks,  wharves,  and  other  terminal  and  transfer  facilities,  barges,  floats 
and  tugs,  stock  yards,  etc. 

G.  The  larger  proportion  of  the  bridges,  trestles,  and  culverts  were 
of  wood,  older  than  those  on  rival  trunk  lines,  and  had  not  been 
replaced  by  iron  and  stone  structures,  as  on  those  lines. 

H.  The  roadway  was  not  in  good  condition.  The  embankments  had 
been  washed  and  not  repaired;  the  ballasting  was  deficient;  the  ditches 
had  not  been  kept  deep  for  proper  drainage;  the  cross-ties  were,  there¬ 
fore,  more  exposed  to  decay;  increased  expense  was  needful  to  replace 
rails  much  worn;  the  sidings  and  yards  were  inadequate  and  poorly 
arranged;  the  line  trestles  for  coal  deliveries  were  insufficient,  and  the 
facilities  at  intersecting  points  and  on  branch  lines  were  imperfect. 

In  brief,  the  rapid  increase  in  the  traffic  of  the  line  prior  to  1874,  far 
exceeded  the  increase  in  its  equipment,  facilities,  and  conveniences. 

Second.  Its  comparative  gross  earning  power. 

A.  Excluding  our  branch  and  leased  lines,  we  connect  at  twenty-one 
points  with  twenty-four  other  railroads,  but  two  of  which  have  our  broad 
gauge,  while  all  railways  connecting  with  the  New  York  Central,  Penn¬ 
sylvania'  and  Baltimore  and  Ohio  railroads  have  one  and  the  same 
standard  gauge. 

The  transfers,  delays,  costs,  and  risks  necessary  to  overcome  these 
breaks  of  gauge,  prevent  many  of  our  direct  and  secondary  connections 
from  forming  remunerative  through  passenger,  freight,  and  express  lines 
with  us;  and  the  same  defects  induce  forwarders  to  prefer  and  use  rival 
non-transfer  routes,  and  thus  create  competition  where  uniform  gauges 
would  induce  co-operation. 

B.  Our  rivals  own,  lease,  or  control  western  connections  over  which 
we  must  often  pass  to  reach  more  distant  neutral  railways.  The  man¬ 
agements  of  the  roads  so  controlled  naturally  discriminate  in  favor  of 
their  principals,  in  important  traffic  conditions  essential  to  equal  com¬ 
petition,  notably  when  private  inducements  are  used  to  secure  traffic. 
We  have  no  control  over  any  railways  west  of  us;  no  like  power  to 
inaugurate  or  contest  any  exceptional  policy,  however  desirable,  and 
no  like  ability  to  secure  new  or  improve  former  through  facilities.  Tho 
New  York  Central  controls  1,530  miles  of  such  connections;  the  Penn¬ 
sylvania  3,235  miles,  and  the  Baltimore  and  Ohio  1,285  miles,  other  than 
and  west  of  their  main  lines;  a  total  of  6,050  miles,  which  is  about 
double  the  mileage  of  the  parent  railways.  A  large  aggregate  of  the  best¬ 
paying  traffic  originates  upon  these  extensions,  at  their  important  sources 
of  grain,  lumber,  live-stock,  and  other  tonnage,  for  a  large  part  of  which 
we  cannot  compete,  because  it  is  local  to  them,  and  for  all  of  which  wo 
are  at  a  disadvantage.  The  powers  of  the  principals  to  increase  their 
revenues  and  reduce  their  expenses  in  accordance  with  the  primary 


7 


purposes,  interests,  and  values  of  such  leases,  by  methods  and  appor¬ 
tionments  beyond  our  influence  or  diligence,  are  exercised  not  only 
upon  the  controlled  lines,  but  the  joint  local  and  connecting  influences 
of  the  lessors  and  lessees  are  also  brought  to  bear  with  equal  force,  to 
our  disadvantage,  upon  more  remote  connections.  If  we  desire,  as  is 
often  needful,  to  use  the  routes  and  facilities  of  such  leased  lines,  to 
secure  or  transmit  traffic,  we  are  in  many  cases  required  to  pay  them 
higher  local  rates,  proportions,  or  mileages  than  those  paid  them  by  the 
controlling  trunk  lines  upon  the  same  traffic;  or,  if  such  controlled  lines 
decline  to  furnish  cars  of  the  proper  classes  to  the  joint  traffic  with  this 
company,  they  necessitate  even  more  frequent  transfers  of  freights,  mails, 
and  passengers  than  the  natural  disadvantages  of  our  gauge  create.  These 
and  similar  causes  are  clearly  beyond  our  present  control. 

C.  Our  geographical  location,  and  connections  to  and  from  other 
western  points  and  districts  yielding  large  proportions  of  through 
traffic,  preclude  average  receipts  therefrom  per  actual  mile  traversed  on 
this  railway  equal  to  our  rivals,  because  of  their  shorter  distances.  Our 
shortest  routes  between  New  York  and  Chicago,  St.  Louis,  Indianapolis, 
Louisville,  Cincinnati,  and  Columbus,  average  81  miles,  or  10  per  cent, 
greater  than  the  distances  via  the  Pennsylvania  Kailroad. 

The  distances  of  our  southerly  rivals  to  Baltimore,  Philadelphia,  and 
Pennsylvania  and  Maryland  points,  compared  with  ours  to  the  same 
points,  are  yet  more  to  our  disadvantage  than  to  and  from  New  York. 
Our  present  routes  between  Boston  and  western  cities,  via  New  York, 
average  150  miles,  or  10  per  cent,  longer  than  via  the  New  York  Cen¬ 
tral  through  Albany,  with  a  greater  disparity  to  points  north  of  Boston. 
Our  greater  distances,  therefore,  clearly  debar  us  from  equal  earnings  per 
mile  on  the  same  traffic.  These  lesser  results  would  be  improved  if 
connecting  lines  shared  our  actual  distances  in  the  divisions  of  through 
rates;  but  they  exact  the  same  earnings  via  our  line  as  via  their  shortest 
routes. 

To  illustrate: — 

The  New  York  Central  distance  from  Buffalo  to  Boston,  upon  which 
through  rates  are  computed  and  divided,  is  500  miles,  which  distance  our 
western  connections  require  us  to  accept,  or  decline  to  give  or  receive 
Boston  traffic  via  this  route.  We,  therefore,  receive  but  500  miles  .of  pay 
for  650  miles  of  actual  transportation,  and  even  this  result  is  lessened  by 
the  necessity  which  devolves  upon  us  to  handle  and  insure  the  property 
at  and  via  New  York.  One  cent  per  ton  per  mile  via  Albany,  without 
transfers,  would,  therefore,  pay  our  route  less  than  three-fourths  of  one 
cent  per  ton  per  mile,  including  transfers  and  insurance,  as  well  as  the 
farther  payment  of  an  arbitrary  proportion  to  our  connections  between 
Boston  and  New  York. 

Similar  causes  affect  passenger  results  to  an  equal  or  greater  extent, 
enabling  passengers  and  speculators  to  use  New  England  tickets  for  New 
York  travel,  to  our  loss. 


8 


The  facts  last  recited  are  so  important  that  they  largely  enabled  the 
New  York  Central  Company  to  earn  cents  per  ton  per  mile  in  its 
last  fiscal  year,  against  x9n%  of  one  cent  per  ton  per  mile  on  the  Erie, 
this  difference  of  being  equal  to  $668,751.73  upon  our  tonnage  mile¬ 
age  of  last  year.  In  addition  to  this  disparity  of  revenue  per  ton  per 
mile,  is  to  be  added  the  equally  important  fact  that  the  average  distance 
transported  of  each  ton  of  freight  on  the  New  York  Central  Railroad 
was  255  miles,  per  its  last  annual  report,  against  180  miles  on  the  Erie. 

Had  we  transported  our  tonnage  the  same  average  distance  as  the 
New  York  Central,  in  our  last  fiscal  year,  the  additional  seventy-five 
miles  would  have  increased  our  gross  freight  revenues,  at  our  own 
average  receipts,  of  of  one  cent  per  ton  per  mile,  in  the  large  sum 
of  $2,090,717.96  upon  miscellaneous  tonnage  alone,  or  $4,404,996.33, 
including  our  coal,  as  the  New  York  Central  includes  its  coal  in 
ascertaining  its  average. 

The  first  of  the  above  items  ($668,751.73)  represents  an  actual  differ¬ 
ence  of  comparative  profit,  and  our  tonnage  mileage  could  have  bedn 
carried  the  increased  distance  and  secured  the  large  increased  revenues 
shown  above,  without  a  corresponding  increase  of  expenses. 

Such  striking  facts  have  great  weight  and  consideration  in  determining 
results,  but  they  are  entirely  ignored  in  the  complaint. 

D.  The  fixed  through  rates  between  seaboard  and  western  cities  are 
greater  per  mile  via  the  short  routes  to  Baltimore,  Philadelphia,  and 
Boston,  than  via  the  shortest  routes  to  New  York;  the  result  of  the 
present  geographical  adjustments  of  long-pending  and  frequent  contests 
upon  seaboard  and  export  freights. 

For  example:  When  the  rate  per  100  pounds  from  Cincinnati 

To  New  York  via  Erie  is  30  cents  for  861  miles, 

To  New  York  via  Pennsylvania  Railroad  it  is  the  same  for  757  miles, 

To  Philadelphia,  28  cents  for  667  miles, 

To  Baltimore,  27  cents  for  579  miles. 

The  result  being: — 

To  the  Erie  from  Cincinnati  to  New  York  at  the  rate  of  of  one 
cent  per  ton  per  mile. 

To  the  Pennsylvania  from  Cincinnati  to  New  York  x7o9on  °f  one  cent 
per  ton  per  mile. 

To  the  Pennsylvania  from  Cincinnati  to  Philadelphia  twqtj  °f  one  cent 
per  ton  per  mile. 

To  the  Baltimore  and  Ohio  from  Cincinnati  to  Baltimore  Xo3^-  of  one 
cent  per  ton  per  mile. 

The  differences  of  rates  above  noted  between  the  three  cities  are  the 
same  if  rates  be  higher  or  lower  than  the  figure  assumed  to  New  York. 

In  addition  to  the  facts  cited,  rates  are  better  maintained  at  Baltimore 
and  Philadelphia,  because  the  traffic  of  Baltimore  is  largely  exclusive  to 
the  Baltimore  and  Ohio,  Philadelphia  to  the  Pennsylvania,  and  New 
England  to  the  New  York  Central,  through  their  several  controlled 


9 


connections  and  their  superior  local  and  terminal  facilities.  The 
rivalries  of  more  numerous  rail  carriers  at  New  York,  and  of  all  with 
the  low  rates  of  the  Erie  Canal  for  a  major  part  of  each  year,  reduce 
the  average  New  York  rates  per  ton  per  mile  of  all  lines  below  those 
upon  like  traffic  at  the  other  cities  and  districts.  A  much  larger 
percentage  of  our  total  through  tonnage  being  to  and  from  New  York 
than  via  the  other  trunk  lines,  we  are  more  seriously  affected  than  they 
by  this  important  cause. 

Combining  the  shorter  distances  to  New  York,  Philadelphia,  Boston, 
and  New  England  with  the  higher  fixed  rates  per  mile;  greater  ability 
to  maintain  the  latter  at  Baltimore,  Philadelphia,  and  Boston;  and  the 
important  fact  that  the  largest  proportion  of  the  through  tonnage  of  our 
rivals  are  to  and  from  those  comparatively  exclusive  and  local  points, 
while  the  majority  of  ours  is  to  and  from  New  York,  they  should 
clearly  earn  and  save  more  per  mile  upon  the  same  competitive  or 
aggregate  through  traffic  and  rates  than  we  now  can,  without  their  other 
advantages  to  which  we  refer. 

E.  The  Erie  meets  fifteen  rail  lines  competing  at  thirty-five  points; 
four  of  which,  competing  at  seven  points,  have  been  completed  since  our 
connection  with  this  railway.  This  partially  new  rivalry,  and  the  de¬ 
crease  in  through  rates  since  1873,  have  reduced  the  local  rates  we  can 
now  obtain,  below  those  formerly  charged  and  below  those  maintained 
by  the  Pennsylvania  and  Baltimore  and  Ohio,  because  those  companies 
control  their  local  rates  by  the  control  of  their  connecting  local  railways, 
or  by  agreements  with  each  other.  Our  local  traffic  is  also  much  less 
in  quantity  and  regularity  than  the  larger  local  business  which  the  New 
York  Central  derives  from  older  and  more  populous  cities,  manufac¬ 
turing  points,  and  districts  upon  its  line. 

The  local  conditions  affecting  quantity  and  relative  profit  are  farther 
dissimilar,  as,  for  instance,  our  Delaware  division  runs  through  a  moun¬ 
tainous  region,  and  is  almost  barren  of  local  traffic,  which  entails  a 
greater  burden  of  cost  in  operating  the  other  more  productive  and 
profitable  mileage  of  the  line.  There  are  no  corresponding  non¬ 
productive  parts  of  the  main  routes  of  the  Pennsylvania  or  New  York 
Central  railways. 

F.  Upon  the  route  of  the  Pennsylvania  Railroad  are  Philadelphia, 
Harrisburg,  Pittsburgh,  etc.,  with  larger  travel  and  tonnage  than  any 
points  on  this  railway,  while  via  Philadelphia  to  and  via  Baltimore, 
Washington,  and  the  south,  it  has  the  largest  travel  that  exists  between 
any  American  cities.  Its  shorter  distances  to  and  from  the  south-west 
are  utilized  by  through  sleeping  and  mail  cars  on  three  quick  through 
trains  each  way  daily,  which,  when  combined,  give  it  commanding  pas¬ 
senger  advantages  in  comparison  with  our  one  through  train  via  the 
Atlantic  and  Great  Western,  or  two  upon  our  Cleveland  route,  the  latter 
with  a  transfer,  and  both  upon  longer  distances.  The  Baltimore  and 
Ohio  also  possesses  advantages  of  time,  distance,  and  reservoirs  of  travel 


10 


at  Washington,  Baltimore,  and  Philadelphia,  as  well  as  more  frequent 
through  passenger  cars  and  trains  between  New  York  and  the  south-west 
via  Cincinnati. 

The  New  York  Central  has  a  large  freight  and  passenger  traffic 
between  the  west  and  New  York,  to  and  from  north-eastern  New  York, 
Montreal,  Canada,  and  New  England  points.  These,  added  to  its 
watering-place,  commutation,  and  Hudson  river  travel,  with  that  to  and 
from  the  state  capital  and  other  large  cities  on  and  adjacent  to  its  line, 
give  it  a  total  of  8,919,438  passengers  in  1877,  as  against  4,887,238  on 
the  Erie,  or  69  passengers  per  train,  against  57  on  the  Erie. 

When  the  Government  decided  upon  fast  mail  trains,  in  1875,  the  New 
York  Central  and  Pennsylvania  companies  were  enabled,  by  their  un¬ 
broken  gauge  and  through  trains,  to  offer  such  advantages  over  the  Erie 
that  those  companies  secured  the  contracts  for  their  carriage,  which 
resulted  in  a  large  reduction  in  our  former  mail  compensation,  and  a 
corresponding  gain  to  them. 

G.  Our  relative  earning  power,  even  upon  New  York  business,  is 
farther  deficient  in  the  following: — 

The  Pennsylvania,  by  recent  arrangements,  runs  freights  to  and  from 
New  England,  via  New  York,  without  transfer,  and  is  enabled  to  taktf 
Baltimore,  Philadelphia,  New  York,  or  Boston  freights  without  reloading. 

The  New  York  Central  offers  non-transfer  lines  to  and  from  Baltimore, 
(via  the  Northern  Central,)  Philadelphia,  New  York,  Boston,  and  all  New 
England  points.  The  Baltimore  and  Ohio  route  offers  non-transfer  to 
Baltimore,  Philadelphia,  and  New  York,  with  a  steam  line  to  Boston, 
and  the  Grand  Trunk  Company,  by  its  Niagara  and  main  lines,  offers 
non-transfer  routes  to  Philadelphia,  New  York,  Boston,  and  eastern  New 
England. 

We  have  no  access  to  Baltimore,  and  one  or  more  transfers  are  una¬ 
voidable  to  and  from  Boston  and  New  England,  as  well  as  upon  portions 
of  our  Philadelphia  and  New  York  traffic.  Forwarders  and  neutral  con¬ 
nections  give  their  preferences  to  the  routes  that,  at  equal  rates,  give  the 
best  facilities  to  and  from  the  greatest  number  of  points;  as,  for  example, 
they  prefer  to  give  their  New  York  patronage  to  the  line  that  carries 
New  England  freights,  rather  than  give  New  York  tonnage  to  one 
and  New  England  freights  to  another  line. 

As  through  travel  usually  follows  the  channels  of  greatest  tonnage 
movement  between  the  same  points,  our  passenger  revenues  are  affected 
by  the  same  causes. 

Q.  In  addition  to  the  important  bearings  of  these  facts  upon  domestic 
freights,  the  Grand  Trunk  Railway  receives  and  forwards  foreign  freights 
via  five  ports:  Boston,  Halifax,  Portland,  Montreal,  and  through  New 
York  via  its  Buffalo  branch. 

The  New  York  Central  issues  through  foreign  bills  via  Boston  or  New 
York;  the  Pennsylvania  via  New  York,  Philadelphia,  or  Baltimore;  and 
the  Baltimore  and  Ohio  through  Baltimore  or  New  York;  and  each  of 


11 


our  rivals  has  one  or  more  foreign  steamship  lines  in  its  exclusive  interest, 
through  contracts,  port  and  dock  facilities,  or  other  means.  We  can 
only  export  and  import  foreign  freights  through  New  York,  where  the 
large  quantities  and  varieties  of  “  spot”  tonnage  from  railway,  canal,  and 
coastwise  sources,  the  greater  competition  of  more  numerous  railways, 
and  the  higher  port  charges  of  New  York  all  secure  to  steamships 
higher  ocean  rates  than  are  charged  at  the  other  ports,  while  cheaper 
rates  and  exclusive  alliances  enable  our  rivals  to  divert  the  rapidly 
growing,  direct,  foreign  tonnage  to  ports  to  which  we  have  no  access. 

R.  In  farther  illustration  of  the  different  earning  powers  of  the  trunk 
lines,  we  note: — 

The  Baltimore  and  Ohio  receives  pay  for  its  entire  distance  of  from  375 
to  384  miles  upon  all  its  Washington,  Baltimore,  Philadelphia,  and  New 
England  freight  and  passenger  business.  Its  gas  coals  pass  from  Clarks¬ 
burg  and  Fairmont  over  more  than  300  miles  of  its  line,  while  its  largest 
bituminous  coal  tonnage  is  from  and  west  of  Piedmont  to  Baltimore, 
and  passes  over  201  miles  of  its  line.  The  Pennsylvania  Railroad 
transports  its  Baltimore  tonnage  and  passengers  via  its  Northern  Cen¬ 
tral  route,  a  distance  of  246  miles,  from  Pittsburgh  to  Harrisburg 
while  its  large  Philadelphia,  New  York,  New  England,  and  other  miscel¬ 
laneous  freight,  express,  passenger,  and  mail  service  passes  over  its  entire 
main  line,  356  miles;  and  its  business  to  points  east  of  Philadelphia  over 
its  New  Jersey  leased  lines  as  well,  444  miles  in  all,  to  New  York.  The 
vast  coal  tonnage  of  the  Pennsylvania  Railroad,  aggregating  about  four 
millions  of  tons  annually,  is  hauled,  for  the  most  part,  over  very  long 
distances.  The  gas  coals  with  which  it  supplies  Philadelphia,  Harris¬ 
burg,  and  interior  points  in  New  Jersey  and  New  York,  are  hauled  from 
within  30  miles  of  Pittsburgh  over  its  entire  main  line.  These  are 
important  elements  in  the  earning  and  economical  success  of  those 
companies. 

Attention  is  also  called  to  the  uniform  haul  of  300  miles  by  the  New 
York  Central  upon  tonnage  and  travel  to  and  from  New  England,  which 
are  in  excess  of  its  through  freights  and  passengers  to  and  from  New 
York. 

The  Erie  company  has  no  such  advantages  of  long  tonnage  haul.  If  we 
possessed  Baltimore  facilities,  they  would  utilize  but  150  miles  of  our  line 
between  Buffalo  and  Elmira.  Our  Philadelphia  traffic  leaves  our  route 
at  Waverly,  168  miles  from  Buffalo,  and  our  New  England  traffic,  via  the 
proposed  all-rail  line,  through  Binghamton,  will  give  us  208  miles  of 
transportation  from  Buffalo  against  the  300  via  the  New  York  Central. 

Our  coal  tonnage  to  the  Hudson  River  gives  us  91  miles  of  haul  from 
Hawley  to  Newburgh,  or  136  miles  in  winter  from  Honesdale  to  Jersey 
City,  for  coal  which  is  transported  in  summer  by  canal,  and  127  miles 
from  Hawley  to  Jersey  City.  Our  Lehigh  Valley  tonnage  gives  us  but 
168  miles  from.  Waverly  to  Buffalo,  and  our  Delaware  and  Hudson 
westward  coal  tonnage  102  miles  more  from  Carbondale,  with  a  large 


12 


number  of  smaller  intermediate  hauls  for  small  deliveries  to,  or  in 
greater  competition  with,  the  large  number  of  connecting  and  cross-lines 
before  noted.  These  differences  in  length  of  haul  operate  against  the 
cost  per  ton  and  per  passenger,  per  mile,  as  the  increased  cost  is  not  pro¬ 
portionate  to  the  increased  distance  carried. 

Its  expenditures. 

At  our  twenty-one  connecting  points  actual  and  expensive  transfers  of 
persons  and  property  are  unavoidable,  because  of  our  exceptional  gauge, 
which  transfers  are  avoided  via  the  uniform  gauges  of  competing  routes. 
To  equalize  this  obstacle  and  secure  a  fair  share  of  the  carrying  trade, 
we  must  incur  expenses  not  borne  by  other  routes,  as  follows: — 

A.  More  laborers  for  handling  goods  to  and  from  other  lines,  or 
to  operate  the  mechanical  appliances  which  partially  obviate  such 
handling,  and  to  transfer  passengers,  baggage,  mails,  and  express  goods. 

B.  Increased  agency,  supervisory,  and  clerical  expenditure. 

C.  Increased  buildings,  platforms,  grain  and  coal  trestles,  etc.,  through 
and  at  which  this  unavoidable  labor  must  be  performed  with  uniform 
dispatch,  regardless  of  weather. 

D.  All  cars  and  freights  to  be  transferred  must  be  taken  to  and  from 
the  transfer  hoists,  houses,  trestles,  or  platforms,  necessitating  increased 
side  tracks,  to  store,  move,  and  handle  cars,  more  power,  fuel,  employes, 
trains,  switches,  and  yards,  than  are  required  by  rival  routes  of  uniform 
gauge. 

E.  More  superintendence,  laborers,  and  materials  for  maintenance 
and  extensions  of  the  transfer  and  yard  structures,  grounds,  and  tracks, 
than  upon  rival  routes,  whose  uniform  gauges  render  them  in  great 
measure  unnecessary. 

F.  Much  of  our  traffic  incurs  these  transfer  expenditures,  both  when 
it  is  received  from,  and  delivered  to,  connecting  carriers,  and  an  unavoid¬ 
able  and  costly  additional  transfer  at  New  York  on  all  New  England 
and  other  traffic  via  New  York,  which  is  an  important  factor  in  com¬ 
parison  with  the  non-transfer  New  England  routes  of  the  New  York 
Central. 

G.  These  transfer  detentions  are  complicated  by  an  equal  necessity 
to  afford  as  quick  transit  as  rival  routes,  or  lose  the  co-operation  of 
neutral  connections  and  the  patronage  of  forwarders.  It  is,  therefore, 
requisite  to  overcome  them  by  greater  speed,  while  our  trains  are  in 
motion,  than  on  competing  routes  where  similar  causes  do  not  control, 
and  whose  through  trains  arrive  and  depart  without  being  delayed, 
broken  up,  transferred,  and  remade,  and  are  therefore  in  motion  while 
ours  are  subject  to  these  transfers  and  delays.  This  greater  speed 
increases  risks  and  the  wear  and  tear  of  rails,  roadway,  power,  and  cars, 
which  are  again  increased,  because  56x%  per  cent,  of  the  706  miles 
of  this  railway  to  Rochester,  Buffalo,  Niagara,  and  Dunkirk  is  of  a  single 
track,  while  the  Pennsylvania  and  New  York  Central  have  entirely 


13 


double,  and  partially  triple  and  quadruple  tracks,  upon  which  slower  but 
continuous  running  speed  makes  equal  or  quicker  through  time,  and 
clearly  at  less  cost.  The  extent  of  our  single  track  requires  yet 
quicker  running  time,  because  of  unavoidable  detentions  at  single- 
track  passing  points,  and  the  need  to  run  slow  at  the  junctions  of  single 
and  double  tracks.  As  we  cannot  entirely  overcome  all  these  detentions 
by  as  quick  through  time  on  all  trains,  it  results  in  a  loss  of  traffic  as  well 
as  an  increased  expense. 

H.  Our  train  expense  is  increased  by  our  higher  and  longer  average 
grades.  The  maximum  grade  of  the  New  York  Central  is  42  feet  to  the 
mile;  the  Erie  60  feet  to  the  mile.  The  New  York  Central  has  but  one 
summit,  and  its  highest  point  above  tide  is  912  feet.  The  Erie  sur¬ 
mounts  five  summits,  at  elevations  of  901,  1,374,  1,780,  1,700,  and  1,615 
feet.  The  total  of  the  westward  ascents  on  the  Erie  line,  459  miles,  Jersey 
City  to  Dunkirk,  is  4,203  feet;  the  sum  of  the  descents  3,602  feet,  while 
of  the  444  miles  of  the  New  York  Central,  New  York  to  Buffalo,  its  west¬ 
ward  ascents  are  but  1,894  feet,  and  its  descents  1,332  feet,  or  less  than 
one-half  the  Erie.  The  New  York  Central  has  195  miles  of  level  road 
between  New  York  and  Buffalo,  while  the  Erie  Railway  has  but  91  miles. 
This  advantage  of  the  Central  in  gradients  is  supplemented  by  an  equal 
one  in  curvature,  as  its  roadway  crosses  comparatively  open  country, 
while  ours  conforms  to  the  arbitrary  topography  of  mountains,  hills,  and 
more  numerous  streams.  These  combined  causes  reduce  the  Erie  average 
in  1876  to  138  tons  per  train,  while  the  New  York  Central  averages  180 
tons,  notwithstanding  the  fact  that  Erie  locomotives  weigh  about  40  tons 
gross  against  an  average  of  about  30  tons  each  upon  the  New  York 
Central.  The  heavier  power  can  transport  but  16  freight  cars  over  our 
higher  gradients,  while  the  lighter  power  of  the  Central  can  haul  32  cars 
over  its  highest  gradients,  and  upon  the  whole  line  of  the  Erie  the 
average  haul  per  train  is  from  26  to  27  cars,  while  that  of  the  New  York 
Central  is  from  40  to  42  cars.  In  addition  to  the  comparatively  greater 
time  and  expense  in  overcoming  the  resistance  offered  by  this  excess  of 
gradients  and  curvature,  we  are  required  to  run  at  yet  greater  speed, 
expense,  and  risk  on  more  level  sections  to  overcome  the  unavoidably 
slower  time  on  grades  and  curves,  to  which  must  yet  be  added  the 
greater  weight  of  the  power  and  cars  required  by  our  wider  gauge,  and 
the  excess  of  wear  and  liear  upon  themselves,  as  well  as  upon  the 
roadway.  When  all  these  causes  are  combined  and  operate  upon  iron 
rails  and  single  tracks  in  part,  they  create  an  excess  of  expenditures 
over  rival  lines  that  is  too  apparent  to  require  argument. 

I.  Fifty-six  per  cent,  of  our  total  tonnage  (coal  excluded)  is  to  and 
from  New  York,  where  we  must  handle  it  twice — once  on  receipt  and 
again  on  delivery,  and  much  of  it  three  times,  in  addition  to  the  stated 
western  transfers.  We  must  transport  freights  to  and  from  and  main¬ 
tain  three  stations  in  New  York,  in  addition  to  the  principal  station  at 
Jersey  City,  and  sustain  a  large,  expensive,  and  unavoidable  organization 


for  harbor  deliveries  and  receipts  at  vessels,  elevators,  inspection  yards, 
and  docks,  according  to  the  custom  of  the  port  and  rival  carriers.  The 
actual  cost  of  this  station  and  harbor  service  (exclusive  of  passenger  ex¬ 
penditure)  upon  the  entire  tonnage  to  and  from  Jersey  City,  including 
the  company’s  freight,  milk,  and  all  freights  handled  by  owners,  was 
equal  to  the  average  cost  shown  in  the  last  fiscal  year  of  operating  forty- 
five  (45)  miles  of  this  railway.  The  proportion  of  our  traffic  upon  which 
this  equivalent  terminal  mileage  accrues  is  greater  than  our  rivals,  as  all 
our  foreign,  coastwise,  and  New  England  trade  is  via  New  York,  while  the 
Baltimore  and  Ohio  at  Baltimore,  and  the  Pennsylvania  at  Philadelphia, 
by  large  expenditures  for  extensive  and  economical  terminal  facilities  in 
warehouses,  wharves,  and  elevators,  now  handle  their  like  traffic  at  those 
cities  but  once,  for  which  they  make  profitable  charges  for  services 
that  create  large  expenses  to  us  at  New  York.  The  majority  of  their 
local  deliveries  at  Baltimore  and  Philadelphia  are  also  made  in  cars  at 
consignees’  warehouses,  for  which  they  not  only  make  remunerative 
charges,  but  the  consignees  then  unload  the  property  at  their  own  cost 
and  risk.  This  clearly  increases  revenue  and  saves  expense. 

Upon  the  New  England  domestic  and  foreign  tonnage  of  the  New 
York  Central,  which  equals  or  exceeds  its  New  York  traffic,  it  incurs  no 
handling  expenses  in  receiving  it  from  western  or  delivering  it  to  eastern 
connections,  which  greatly  reduces  its  expenditures.  It  merely  hauls  the 
cars,  while  we  must  transfer,  haul,  and  unload  them,  and  then  lighter 
and  deliver  their  contents  to  connecting  steamers. 

We  also  deliver  and  exchange  freights  and  passengers  at  five  points, 
to  wit:  Rochester,  Salamanca,  Dunkirk,  Buffalo,  International  and  Sus¬ 
pension  bridges,  varying  from  5  miles  to  240  miles  of  each  other  via 
this  railway;  the  New  York  Central  at  but  three — all  of  which  are  within 
twenty-five  (25)  miles  of  each  other — and  the  Pennsylvania  Railroad  at 
but  two  points.  This  disparity  farther  adds  to  our  transfer  delays,  train 
mileage,  and  service,  switching  and  other  labor,  for  which  we  receive 
only  the  proportions  of  through  rates  allowed  to  our  rivals. 

K.  We  now  incur  larger  expenditures  for  renewals  and  maintenance, 
because  65  per  cent,  of  the  rail  of  our  main  lines  is  of  iron,  while  the 
entire  lines  of  the  Pennsylvania  and  New  York  Central  companies  are 
laid  with  steel  rails.  From  this  fact  the  cost  of  iron  and  steel  used  in 
the  repairs  of  our  tracks  for  the  fiscal  year  1876  was  $281,240.06  more 
than  the  New  York  Central. 

The  present  need  to  maintain  six  rails,  partly  iron  and  partly  steel, 
upon  the  two  tracks  between  Waverly  and  Suspension  and  International 
bridges,  a  total  distance  of  194  miles,  and  the  running  of  broad  and 
narrow-gauge  cars  in  the  same  trains,  palpably  create  greater  expense 
than  the  maintenance  of  but  four  narrow-gauge  steel  rails,  and  the  run¬ 
ning  of  but  one  gauge  of  cars  thereon. 

L.  Our  wider  gauge,  when  doubled  for  double  track,  requires  the  care 
and  maintenance  of  wider  permanent  way,  embankments,  and  cuts,  larger 


15 


yards  and  terminal  grounds,  freight  warehouses,  car  and  engine  houses, 
bridges,  trestles,  and  masonry;  and  in  the  purchase  of  materials  for  their 
construction,  repair,  and  renewal,  as  well  as  for  the  cars  and  locomotives, 
needful  provisions  must  be  made  for  the  greater  width  and  weight. 

M.  The  control  by  our  rivals  of  6,050  miles  of  western  leased  lines  en¬ 
ables  them  to  charge  to  those  lines  proportions  of  traffic  expenses, 
rebates,  commissions,  and  allowances,  which  we  cannot  similarly  exact. 

N.  Prior  to  your  connection  with  this  railway,  contracts  w^ere  made  by 
which,  in  various  forms,  it  leased,  operated,  or  maintained  fourteen  local 
branch  lines.  We  believe  diligence  has  been  used  to  render  them  as 
commercially  and  economically  productive  as  practicable,  or  modify  their 
onerous  terms;  but  these  efforts  could  not  avail  much  against  the  force  of 
business  depression  or  the  agreements  under  which  they  were  operated. 
There  was  a  direct  loss  in  operating  them,  for  our  last  fiscal  year,  of 
$323,989.22,  and  a  loss  from  the  same  cause  during  the  period  from  July 
1st,  1874,  to  September  30th,  1877,  of  $899,103.66.  The  reports  of  rival 
trunk  lines  do  not  show  like  losses. 

O.  Your  administration  has  been  involved  in  undue  expenditures 
growing  out  of  prior  onerous  contracts  with  the  Union  Car  Company, 
Jefferson  Car  Company,  the  National  Stock  Yard  Company,  and  others, 
largely  beyond  control. 

P.  The  New  York  Central  has  been  under  its  present  management 
fourteen  years;  the  Pennsylvania  practically  twenty-three  years;  and  the 
Baltimore  and  Ohio  twenty  years.  During  the  shortest  of  these  periods 
the  Erie  Railway  has  been  managed  by  seven  presidents,  with  yet  more 
numerous  subordinate  officers. 

The  unfortunate  results  of  these  frequent  and  entire  changes  have 
appeared  in  diverse  local  and  through  traffic  policies;  as,  for  instance, 
commutation  travel  has  been  retarded  by  frequent  changes  in  local 
trains,  the  manufacturing  interests  on  the  line  were  not  uniformly 
developed;  and  the  relations  of  this  railway  to  local  and  terminal 
connections  varied,  as  temporary  purposes  encouraged  or  opposed 
them.  Connecting  lines  and  the  public  preferred  to  establish  their 
permanent  relations  with  routes  whose  stability  of  purpose  and 
management  were  apparently  more  assured  than  the  Erie.  This  cause 
can  scarcely  be  computed  in  its  disastrous  effects  upon  the  develop¬ 
ment,  improvement,  and  retention  of  the  traffic  resources  and  facilities 
of  this  line  at  periods  when  its  rivals  were  strengthening  every  avenue 
to  their  resources.  This  cause  is  especially  pertinent  in  the  results 
of  discarding  or  changing  former,  or  adopting  entirely  new,  patterns 
of  locomotives,  freight,  passenger,  and  coal  cars,  iron  and  wooden 
bridges,  trestles,  depot  buildings,  etc.  We,  consequently,  have  a  greater 
variety  in  their  patterns,  sizes,  and  capacities,  than  any  rival  or  other 
railway  of  which  we  have  Knowledge.  The  extent  and  variety  of 
material  and  patterns,  from  this  cause,  required  to  be  kept  on  hand 
for  repair  and  renewal,  create  expenses  for  purchasing  and  carrying 


16 


them  and  applying  labor,  much  in  excess  of  the  like  needs  or  expends 
tures  upon  trunk  lines  whose  continuous  able  administrations  estab¬ 
lished  and  adhere  to  uniform  patterns  and  standards,  subject  only  to- 
adaptation  to  demonstrable  improvements,  which  policy  and  action 
largely  reduced  their  cost  of  construction  and  maintenance,  materials 
on  hand,  interest  account  therefor,  and  the  labor  of  manufacture.  To- 
illustrate  this  important  point, — there  were,  in  1876,  upon  this  railway 
eighty-three  (83)  patterns  of  locomotives,  two  hundred  and  thirty  (230) 
of  freight  cars,  about  ten  (10)  of  passenger,  and  fifteen  (15)  of  coal  cars. 

Q.  Some  of  our  expenditures  during  the  periods  quoted  in  the  com¬ 
plaint  were  fixed  by  contracts,  as  our  bituminous  coal  from  the  Bloss- 
burg  fields  (since  reduced  in  contracts  elsewhere  alleged  as  fraudulent); 
and  the  growing  scarcity  of  timber  has  maintained  or  advanced  tho 
prices  of  cross-ties  and  some  classes  of  lumber. 

It.  The  reasons  set  forth  why  wide-gauge  tracks  reduce  earning  power 
and  increase  expenses  have  been  proven  in  the  narrowing  of  the  Ohio 
and  Mississippi  and  Grand  Trunk  railways  to  the  standard  gauge.  Those 
companies  showed  increases  of  traffic  and  reductions  of  expenditures, 
after  the  changes  of  their  gauge.  Our  larger  traffic  and  more  numerous 
connections  may  be  expected  to  accomplish  equally  or  more  favorable 
results  to  the  Erie  Railway  if  its  gauge  be  made  'uniform  with  connecting 
roads. 

For  the  reasons  set  forth  our  exceptional  broad  gauge  cannot,  in  our 
judgment,  secure  gross  earnings  or  net  economies  per  train,  per  pas¬ 
senger,  and  per  ton  per  mile  (the  units  of  all  railway  traffic  results) 
equal  to  lines  upon  which  the  same  causes  do  not  operate,  or  in  the  same 
measure. 

Third.  That  this  railway  “is  fully  supplied  with  the  usual  equipment  and 
“facilities  to  transport  its  traffic  with  economy  and  dispatch ,” 

A.  From  New  York  to  Buffalo  and  Suspension  and  International 
bridges,  and  Dunkirk  and  Rochester,  706  miles,  being  our  main  lines 
opposed  to  the  New  York  Central  and  Pennsylvania  railroads,  we  have 
401  miles  or  56x8o  per  cent,  of  single  tracks,  and  65  per  cent,  of  the  total 
distance  is  laid  with  iron  ?*ails,  while  the  main  lines  of  the  New  York 
Central,  from  New  York  to  Suspension  and  International  bridges  and 
Buffalo,  are  entirely  double-tracked,  and  for  225  miles  it  has  actually,  or,, 
including  its  Harlem  and  Suspension  Bridge  lines,  it  has  constructively* 
four  tracks  the  entire  distance,  and  all  of  steel. 

The  Pennsylvania  Railroad  is  entirely  double-tracked  with  steel  rails, 
from  New  York  to  Pittsburgh,  and  has  146  miles  of  third  and  fourth 
track,  in  addition  to  customary  sidings. 

The  relative  economies  of  moving  a  large  traffic,  upon  equal  through 
time,  with  such  dissimilar  facilities,  are  too  apparent  for  discussion. 

B.  We  have  not  the  “  necessary  and  proper  equipment  and  facilities”" 


17 


in  station  and  transfer-houses,  conveniences,  sidings,  etc.,  at  most  of  the 
points  of  transfer  intersection,  even  with  our  present  gauge. 

C.  We  are  farther  deficient  in  the  “equipment  and  facilities”  of  rival 
lines,  particularly  at  the  most  important  points  of  Rochester,  Buffalo, 
International  and  Suspension  bridges,  and  New  York,  in  the  aggregate 
of  freight  and  passenger  depots,  grain  elevators,  docks,  wharves,  and 
storage  warehouses,  by  means  of  which  traffic  is  secured,  expedited, 
and  retained,  and  fewer  cars  enabled  to  do  a  larger  traffic  with  greater 
“economy  and  dispatch.” 

We  have  access  to  but  one  grain  elevator  at  Buffalo,  while  the  New 
York  Central  tracks  at  that  city  reach  six,  with  a  united  capacity  of 
2,375,000  bushels,  and  including  the  one  reached  by  this  railway.  The 
New  York  Central  also  connects  with  two  grain  elevators  at  Boston, 
holding  1,500,000  bushels;  it  has  recently  completed  one  at  its  own  New 
York  terminus  equal  to  1,000,000  bushels,  and  has  contracted  for  another 
at  New  York.  The  Pennsylvania  owns  or  controls  five  grain  elevators, 
holding  2,400,000  bushels,  at  Philadelphia  and  Baltimore,  and  the  Balti¬ 
more  and  Ohio  owns  and  operates  two  at  Baltimore,  holding  2,000,000 
bushels,  while  we  have  direct  access  to  none  of  those  or  others  at  tide¬ 
water. 

The  New  York  Central,  via  Boston  and  at  New  York,  the  Pennsylvania 
at  Philadelphia  and  Baltimore,  and  the  Baltimore  and  Ohio  at  Baltimore, 
all  have  additional  wharves,  docks,  and  facilities,  by  which  transfers  of  all 
freights  other  than  grain  are  made  direct  to  and  from  steamers  and  other 
vessels. 

We  have  none  such  at  any  port. 

We,  therefore,  lack  the  “ usual  and  proper  facilities  ”  in  these  essentials 
to  secure  like  “ economy  and  dispatch”  to  the  largest  classes  and  volume 
of  traffic,  and  incur  lighterage  and  handling  instead. 

D.  In  comparison  with  the  New  York  Central,  Pennsylvania,  and 
Baltimore  and  Ohio  roads,  this  railway  is  deficient  in  cars  and  power,  as 
shown  by  their  last  annual  reports,  when  regarded  in  relation  and  pro¬ 
portion  to  gross  tonnage  and  the  gross  mileage  it  traverses.  The  New 
York  Central  and  Pennsylvania  and  their  connections  have  each  more 
than  double  our  number  of  cars  in  their  through  lines,  and  the  same 
deficiency  exists  via  the  Erie  in  cars  for  local  traffic  exchanges. 

E.  We  note  our  great  deficiencies  in  adequate  shops  for  construc¬ 
tion  and  repair,  and  car  and  engine  houses.  With  few  exceptions 
those  we  have  are  inadequate  in  size,  wrong  in  location,  deficient  in 
number,  and  lacking  modern  improvements  in  labor-saving  appliances, 
tools,  and  machinery.  To  illustrate,  we  can  house  but  321  of  our  475 
engines,  or  less  than  68  per  cent.,  and  much  of  that  room  is  located  so 
that  a  large  proportion  must  stand  out  of  doors. 

Where  our  limited  power  and  cars  are  so  fully  used,  these  draw¬ 
backs  to  the  maintenance  of  uniform  good  condition  by  prompt  repairs 
when  required,  are  serious  defects  in  our  equipment  and  facilities.  The 


18 


superiorities  of  our  rivals  in  these  important  particulars  enable  them 
to  better  construct  and  maintain  engines,  cars,  bridges  of  wood  or  iron, 
wheels  and  other  castings,  forge  axles,  construct  water  and  other 
stations,  and  to  manufacture  many  articles  of  railway  use  below  the 
cost  and  profit  we  must  pay  private  manufacturers  therefor. 

F.  It  is  of  public  knowledge  that  our  passenger  and  freight  structures 
and  facilities  are  not  equal  in  construction,  capacity,  economic  appli¬ 
ances,  condition,  or  security  to  those  of  rival  lines,  and  the  insurance  or 
risks  we  incur  thereon  are,  therefore,  greater  than  theirs.  A  comparison 
of  our  station  and  other  buildings,  docks,  wharves,  shops,  and  yards  at 
New  York  and  Jersey  City,  with  those  belonging  to  the  New  York 
Central  and  Pennsylvania  roads  at  the  same  points  for  like  purposes, 
afford  easily  accessible  and  fair  standards  for  comparisons  of  the  like 
facilities  of  the  three  companies  at  all  points  on  their  lines. 

G.  Our  line  is  not  equipped  with  the  electric  signals,  nor  the  steam  or 
air  passenger  brakes,  one  or  both  of  wdiich  are  in  use  upon  the  New 
York  Central  and  Pennsylvania  roads,  and  to  the  important  extent  that 
these  are  “  equipment  and  facilities,”  and  aid  11  economy  and  dispatch,” 
and  security,  we  are  clearly  deficient. 

H.  All  money  expended  upon  railways  is  intended  to  improve 
some  or  all  aspects  of  their  condition,  earning  power,  and  equipment. 
The  Pennsylvania  Railroad  increased  its  cost  of  road  and  equipment 
$24,551,947.51  between  its  annual  reports  of  1867  and  1875;  and  the 
New  York  Central  Railroad  increased  its  like  items  in  the  same  periods 
$42,256,331.72,  which  amounts,  being  judiciously  expended  for  those  pur¬ 
poses,  have  placed  the  present  earning  and  economic  power  of  those 
properties  far  in  advance  of  our  own. 

We  next  proceed  to  answer  more  in  detail  the  17th  section  and  other 
so-called  comparisons  of  expenditure  before  referred  to: — 

A.  The  charge  that  the  11  annual  expense  has  been  $5,000,000  more  than 
“  competent  administration  would  have  shown,”  is  an  unsupported  assertion 
which  requires  no  other  answer  than  the  facts  herein  stated. 

B.  That  we  “ have  thousands  of  useless  and  unnecessary  employes” 

There  is  a  present  necessity  for  more  employes  on  the  Erie  than  on 

other  lines,  because  it  requires  more  men  to  take  care  of  a  roadway 
laid  mainly  with  iron,  needing  renewals,  than  on  a  perfected  roadway  of 
steel;  more  men  to  watch  and  repair  wooden  bridges,  than  those  of 
iron  and  stone;  more  men  at  switches  where  double  and  single  tracks 
join,  and  more  because  of  our  poorly-arranged  yards;  more  men  to 
transfer  freights  and  passengers,  which  other  lines  do  not;  more  men 
to  watch  and  guard  our  more  numerous  and  imperfectly-sloped  cuts 
against  land-slides  and  detached  rock,  and  secure  safety  equal  to  other 
level  open  lines;  more  men  to  get  our  trains  at  equal  through  time  over 
a  partly  single  line;  more  men  to  work  with  defective  repair  and  shop 
facilities,  station  buildings,  and  transfer  houses,  than  with  complete  ones; 


19 


more  men  to  handle  freights  at  terminal  points  without  proper  elevators, 
docks,  and  warehouses,  than  upon  lines  which  have  them;  more  men  to 
work  our  greater  proportion  of  branches,  and  our  more  numerous  terminal 
and  connecting  points;  and  more  in  other  minor  particulars  resulting 
from  the  causes  stated. 

We  also  have  more  men  proportionately  as  we  perform  transfer  ser¬ 
vices  in  and  about  New  York  and  the  harbor,  and  at  Jersey  City,  which 
our  rivals  perform  by  contract.  Our  Jersey  City  and  New  York  station 
pay-rolls  show  that  we  employed  in  this  service  993  men  in  March,  1878. 

Notwithstanding  these  unusual  needs,  we  have  reduced  our  employes 
as  follows,  during  a  period  in  which  our  business  has  largely  increased: — 


There  were  in  June,  1874,  when  you  became  president,  all  classes . 15,449  men. 

There  were  in  April,  1877,  date  named  in  complaint . . 11,314  “ 

Reduction  27  per  cent.,  or .  4,135  men. 


To  reduce  long-established  forces,  and  to  add  the  labors  of  the  dis¬ 
missed  to  those  who  remain,  without  increased  compensation,  required 
individual  effort  consuming  much  time  and  discriminating  care. 

C.  That  we  “  have  paid  20  per  cent,  more  than  the  services  were  worth ,  or 
u  were  paid  therefor  by  other  lines.” 

We  believe  the  wages  paid  superintendents,  agents,  and  clerks  were 
not  more  than  they  were  reasonably  worth,  and  were  not  more  than  paid 
by  other  lines,  as  comparisons  show,  notwithstanding  former  deficiencies 
in  the  condition  and  facilities  of  the  road,  which  required  more  skill  to 
operate  it  without  accident.  The  delayed  payments  of  wages  induced 
our  laborers  to  discount  their  wages.  •  These  were  difficult  conditions  to 
■change  in  addition  to  a  great  reduction  of  forces,  and  without  inter¬ 
rupting  our  business;  yet  it  has  been  largely  done  since  dates  covered 
by  the  complaint,  by  regular  and  prompt  payments  of  wages  when  due, 
and  by  reductions  accomplished  the  past  season  in  the  rates  of  wages. 

The  differences  of  wages  at  no  time  amounted  to  20  per  cent,  on  any 
•class  of  employes. 

D.  “  That  we  have  paid  excessively  for  maintenance  of  way,  motive  power, 
uand  equipment,  as  shown  by  the  tables,  which  offer  ready  and  convenient 
**  standards  of  comparison.” 

We  have  detailed  dissimilarities  of  prior  condition,  present  earning 
power,  expenditure  necessity,  and  equipment  and  facilities,  which  prove 
the  so-called  standards  and  comparisons  of  the  complaint  worse  than 
valueless,  because  they  are  false. 

Other  causes  operate  upon  true  comparisons,  such  as — 

The  geographical  differences  of  climate. 

The  varying  accessibility  and  cost  of  fuel. 

The  differences  in  the  demand  and  supply  of  labor  in  different  sections 
and  seasons.  For  examples:  We  can  get  more  and  cheaper  labor  in 
Buffalo  in  winter,  when  lake  and  canal  navigation  are  closed,  than  in 


20 


summer,  and  we  must  pay  more  at  New  York  than  the  Baltimore  and 
Ohio  pays  in  the  mountains  of  Virginia. 

E.  It  is  next  charged  that  the  Erie  pays  more  than  the  other  com¬ 
panies,  as  follows: — 


F1.  General  superintendence — More  than  New  York  Central .  $21,383 

F2.  All  offices,  not  including  above — More  than  New  York  Central .  51,973 

F3.  Clerks,  &c.,  and  in  general  offices — More  than  New  York  Central. . .  103,140 

F4.  Station  agents,  clerks,  and  foreign  and  emigrant  agencies — 

More  than  New  York  Central .  403,960 

F5.  Supervisors,  foremen,  laborers,  watchmen,  flagmen,  &c. — 

More  than  New  York  Central .  171,853 

More  than  Pennsylvania  Railroad .  172,923 

More  than  Baltimore  and  Ohio .  177,807 

F6.  Maintenance  of  way,  motive  power,  all  cars,  agencies,  general  super¬ 
intendence,  and  handling  freight — 

More  than  Baltimore  and  Ohio .  4,477,804 

More  than  Pennsylvania  Railroad .  3,150,476 

More  than  New  York  Central  Railroad .  3,619,002 


We  can  find  no  such  figures  in  the  annual  statements  to  the  state 
authorities,  but  we  do  find  the  following: — 


F1. 


Erie. 


New  York 
Central. 


Lake  Pennsylvania 

Shore.  Railroad. 


General  superintendence.. $141, 810  $194,198  $220,565  $184,109 

Thus  Erie  is  less  than .  52,388  78,755  42,299 


This  charge  is,  therefore,  clearly  false,  and  in  this  respect  our  expenses 
are  less,  notwithstanding  our  greater  difficulties  of  management. 

F2.  Clerks ,  See.,  and  in  general  offices. 

No  such  items  appear  in  either  report,  and  the  figures  are  apparently 
fictitious. 

F3.  We  reported  as  paid  general  office  clerks,  .  .  .  $158,322  52 

To  which  they  seem  to  have  added  item,  clerks  to  supts.,  18,813  00 
(No  such  item  appears  or  exists  in  our  accounts.) 


Making  total,  ........  $177,135  52 

Which  they  have  compared  with  arbitrary  item  on  New 
York  Central;  and  no  such  item  appears  in  its  accounts,  73,995  00 
This  entire  comparison  is,  therefore,  false. 

F4.  Station  agents,  clerks,  and  foreign  and  emigrant  agencies. 

The  amounts  charged  to  each  or  the  aggregate  of  these  items  do  not 
appear  in  the  reports  or  accounts  of  either  company,  and  are,  therefore, 
erroneous. 

F5.  The  necessity  for  more  supervisors,  foremen,  laborers,  watchmen, 
and  flagmen,  has  been  shown.  They  were  not  paid  more  each  than  the 
average  on  other  lines,  and  we  secured  and  kept  their  services  at  irregu¬ 
lar  and  delayed  pay,  while  other  companies  offered  the  reverse. 

The  wages  paid  each  of  these  classes  of  men  are  shown  in  Appendix 
(marked  A). 


21 


F6.  Maintaining  way ,  power,  cars,  agencies,  superintendence,  handling 
freight,  Toeing  $3, 7  1^9, 09 Jf,  more  than  the  average  of  the  Baltimore  and  Ohio, 
Pennsylvania,  and  New  York  Central  for  like  expenses . 

The  amounts  quoted  as  ours,  as  well  as  those  of  our  rivals,  are  untrue, 
garbled  in  being  extracted,  and  combined  and  grouped  so  as  to  misrepre¬ 
sent  actual  results.  The  income  and  outgo  accounts  of  the  trunk  rail¬ 
ways  represent  aggregate  transactions  ranging  from  twenty  to  sixty  mil¬ 
lions  of  dollars  per  annum  on  each  of  the  different  lines,  and  each  made 
up  of  thousands  [of  entries  which  conform  to  methods,  forms,  books, 
systems,  and  tables,  distributions  and  assignments,  which  vary  according 
to  state  regulations,  methods  of  division  with  branches,  personal  judg¬ 
ment  or  preference,  local  precedents,  rulings  of  boards,  or  other  causes, 
and  are  then  represented  in  annual  and  other  reports,  under  various 
heads,  classifications,  names  and  amounts  in  the  items,  but  correct 
in  the  totals.  Even  approximate  accuracy  in  the  comparison  of 
details  is,  therefore,  impracticable,  if  honestly  intended,  while  the  di¬ 
versities  of  systems  afford  ample  opportunities  for  intentional  or  igno¬ 
rant  misrepresentations,  as  in  the  present  instance,  where  $975,610  of 
the  Erie  expense,  $560,563  of  the  Baltimore  and  Ohio,  $4,734,284  of  the 
New  York  Central,  and  $1,847,657  of  the  Pennsylvania  Railroad  have 
been  omitted,  and  the  actual  results  and  comparisons  with  all  those  lines 
distorted  to  our  detriment. 

For  examples,  we  cite: — 


22 


ERIE  CHARGES  IN 

ITS  ACCOUNTS  FOR  1876. 

While  New  York 
Central  accounts 
show 

Items. 

To  amount 
of 

To  account  called 

Supervisors,  maintenance  of 
way,  superintendents,  and 

$92,498 

288,453 

Superintendence  and 
contingencies. 

No  such  items  or 
heading. 

Cleaning  &  housing  engines. . 

Account  called  same. 

No  like  account. 

Operating  telegraph . 

112,999 

Telegraph  operators. 

No  similar  item. 

Agents  and  clerks,  including 
fast  freight  lines . 

904,170 

Agents  and  clerks. 

Only  $597, 304un- 
der  same  head. 
It  charges  fast 
freight  lines  to 
labor,  loading 
and  unloading. 
Therefore  see 
next  item. 

Labor,  loading  and  unload¬ 
ing,  including  lighterage. . 

753,257 

Labor,  loading  and 
unloading. 

To  this  account, 
$999,931;  and 
to  lighterage 
and  cartage, 
$830,538;  total, 
$1,830,511;  or 
$1,077,254  more 
than  Erie. 

Porters,  watchmen,  and 
switchmen . 

321,634 

Account  same  name. 

Same  account, 
but  amount 

was  $678,738 
largely  in  ex¬ 
cess  of  Erie;  but 
next  item. 

Conductors,  baggagemen,  and 
brakemen,  dispatchers,  &c. 

* 

1,272,764 

Account  same  name. 

Same  item,  $751,- 
268,  but  does 
not  include  sta¬ 
tion,  baggage¬ 
men,  or  yard 
brakemen. 

General  office  expense . 

88,611 

Account  same  name. 

Charged  to  office 
expenses,  sta¬ 
tionery,  &c. 

Legal  expenses . 

92,908 

Account  same  name. 

Charged  to  con¬ 
tingencies. 

Hire  of  cars . 

In  this  item  we  charge  only 
difference  between  amounts 
paid  and  received  on  this  ac¬ 
count,  and  service. 

218,115 

Account  same  name. 

$1,524,952,  seven 
times  Erie 
amount.  New 
York  Central 
charges  this  to 
expenses,  and 
credit  what  it 
receives  to 
earnings. 

Equally  diverse  systems,  as  compared  with  our  own  and  with  each 
other,  exist  on  both  the  Pennsylvania  and  Baltimore  and  Ohio  railroads; 
but  enough  has  been  shown  to  prove  the  falsity  of  the  comparisons  of 
the  complaint,  their  worthlessness  as  standards  of  management,  and  that 
the  only  true  bases  of  comparison  are  aggregate  annual  statistics  reduced 


23 


to  the  few  items  of  receipts  and  expenses  per  train,  per  ton,  and  per 
passenger  per  mile,  and  even  those  results  must  then  be  honestly  and 
justly  considered  with  reference  to  the  conditions,  peculiarities,  gauges, 
disabilities,  and  facilities,  which  surround  and  determine  them  upon 
each  railway. 

The  complaint  next  proceeds  within  our  departments  to  particularize 
certain  hearsay  charges  of  mismanagement,  corruption,  and  improvi¬ 
dence. 

We  note  and  answer  them  in  their  order: — 

Page  42,  section  15,  folios  165  to  169,  inclusive,  is  in  effect: — 

“  That  during  the  month  of  March,  1877,  the  said  Jewett  made  an  illegal 
u  agreement  with  one  Thomas  Dickson,  who  was  at  the  time  the  president  of  the 
11  Delaware  and  Hudson  Canal  Company,  and  also  one  of  the  directors  of  the 
“  said  Erie  Railway  Company,  by  which  agreement  an  unjust  and  unwar- 
11  ranted  rebate  was  made  to  the  said  Delaware  and  Hudson  Canal  Company 
“  by  said  Jewett,  receiver,  of  sums  aggregating  more  than  $ 71,000  upon  ac- 
l:  counts  amounting  to  $156,000,  while  at  the  same  time  the  said  Delaware  and 
“  Hudson  company  owed  the  receiver  $ 298,000 .” 

The  accounts  show  this  statement  of  amounts  to  be  incorrect  and  mis¬ 
leading,  and  to  cover  periods  different  from  those  stated. 

Regarding  the  actual  sums  due  us,  the  Delaware  and  Hudson  company 
held  certain  amounts  payable  for  transportation  as  an  offset  against 
the  final  adjustment  of  balances  claimed  to  be  due  to  it  for  Erie  guarantee 
upon  Boston,  Hartford  and  Erie  bonds,  etc. 

The  court  authorized  an  arrangement,  but  the  matter  is  not  yet  finally 
adjusted. 

The  following  are  the  facts  respecting  the  lesser  transportation  rates 
charged  to  the  canal  company: — 

We  deny  any  illegal  agreement,  or  the  payment  of  unjust  or  unwar¬ 
ranted  rebates.  All  the  rates  and  arrangements  made  were  necessary, 
and  clearly  within  the  authority  conferred  upon  you  in  the  orders  ap¬ 
pointing  you  receiver. 

August  22d,  1876,  prior  to  the  dates  in  the  complaint,  the  so-called 
anthracite  coal  combination  was  disrupted,  and  not  renewed  during  our 
last  fiscal  year. 

A  contest  ensued  among  the  coal  companies  and  their  own  and  other 
transportation  lines,  which  finally  reduced  the  prices  of  coal  at  tide 
water  and  Lake  Erie  and  Ontario  ports  about  one-half. 

Many  of  these  joint  mining  and  carrying  companies  competed  with 
coal  companies  using,  and  railways  connecting,  with  the  Erie,  among 
them  being  the  Lehigh  Valley,  the  Philadelphia  and  Reading,  the  Penn¬ 
sylvania,  the  Central  of  New  Jersey,  and  the  Delaware,  Lackawanna  and 
Western  railways.  It  is  idle  to  assume  that  those  or  any  railways 
charged  or  received,  or  could  do  so,  as  high  rates  of  freight  when  coal 


24 


sold  at  $2.50  per  ton  as  when  it  sold  at  $4.50.  The  miners  and  trans¬ 
porters  last  named,  therefore,  publicly,  and  simultaneously  with  the  re¬ 
duced  prices  of  coal,  reduced  their  coal-transportation  rates  for  all  their 
patrons  and  to  all  their  tide-water  termini,  in  competition  with  coal  com¬ 
panies  and  connecting  carriers  using  this  railway.  The  latter  then  repre¬ 
sented  to  us  that,  after  deducting  their  contract  transportation  rates  from 
sale  prices  realized  at  points  of  competition,  equal  to  those  realized  by 
competing  coal  companies  and  carriers  at  the  same  or  equivalent  points, 
they  would  incur  large,  continuous,  and  unavoidable  losses,  the  result  of 
which  would  be  that  they  would  send  their  coal,  when  practicable,  to  other 
and  more  profitable  points,  cease  its  transportation  via  this  railway,  or  use 
all  available  routes  rival  to  our  own,  which  sought  the  carriage  of  the  whole 
or  any  part  of  their  coal  at  their  reduced  rates,  to  all  common  points  and 
for  any  periods.  Diligent  inquiry  confirmed  these  and  other  facts,  which 
were  farther  substantiated  by  the  actual  sales  results  from  like  coal 
mined  from  our  lands  and  sold  under  our  control.  The  alternative  pre¬ 
sented  us  was  to  modify  our  rates  in  accordance  with  the  facts,  and 
thereby  carry  our  proportion  of  coal  during  the  lapse  of  the  combination, 
or  by  declining,  to  risk  the  loss  of  our  competitive  coal  tonnage  pending 
a  new  combination,  since  formed. 

The  following  considerations  also  influenced  the  conclusions:  If  we 
charged  prohibitory  rates  our  coal  cars  and  power  would  remain  idle 
at  greater  loss  and  risk  to  themselves  than  if  in  use,  and  our  patrons 
and  coal  companies  would  promptly  establish  rival  purchase,  sale,  and 
transportation  relations  elsewhere,  and  be  difficult  to  regain.  The  percent¬ 
ages  of  production  to  'which  this  railway  and  the  coal  companies  in  its 
interest  might  otherwise  be  entitled  in  any  subsequent  apportionment, 
would,  in  that  event,  be  reduced  to  the  extent  of  the  traffic  surrendered, 
which,  having  been  voluntary,  its  return  could  not  be  made  compulsory. 
Rival  coal  miners  and  carriers  were  actively  soliciting  our  patrons  at  the 
prices  at  which  they  were  carrying  coal  for  others.  The  Receiver  of  the 
Central  Railroad  of  New  Jersey  has  recently  testified  to  the  Senate  com¬ 
mittee  of  New  Jersey,  at  Trenton,  that  his  company  transported  coals 
during  this  period  at  40  per  cent,  of  the  prices  realized  at  tide-water. 

We  declined  its  carriage  at  such  rates  for  lesser  distances,  and  main¬ 
tained  without  abatement  the  contract  basis  of  rates  to  our  non-competi¬ 
tive  stations. 

In  addition  to  these  competing  routes  eastwardly,  there  existed  west- 
wardly  routes  via  the  Lackawanna,  Lehigh  Valley,  Southern  Central, 
and  Northern  Central,  all  in  connection  with  the  New  York  Central,  via 
the  Philadelphia  and  Erie  and  Buffalo  and  Philadelphia  railroads,  the 
Erie  Canal  and  Lake  Ontario,  all  of  which  placed  coal  at  Cleveland, 
Detroit,  Chicago,  Milwaukee,  and  other  competing  points  at  freight 
rates  below  our  contracts.  This  competition  was  aided  by  the  reduction 
of  former  Erie  Canal  coal  tolls,  as  the  total  freights  to  Buffalo  by  rail 
could  not  exceed  the  reduced  rates  to  tide,  added  to  those  of  the  canal 
from  tide  to  Buffalo;  and  the  coal  rates  from  Charlotte,  Oswego  and  Fair- 


25 


haven  upon  Lake  Ontario,  in  returning  lumber  and  grain  vessels  were 
lower  than  ever  before  known. 

All  our  contracts  with  the  canal  company  also  required  us  to  give 
it,  in  any  event,  as  low  rates  per  mile  as  we  accepted  from  other  compa¬ 
nies;  and  our  Lehigh  Valley  and  other  connecting  contracts  required, 
according  to  uniform  custom,  that  we  prorate  the  through  rates  made, 
which  were  also  prorated  upon  the  longer  routes  via  the  New  York  Cen¬ 
tral.  In  addition  to  the  stated  rail,  canal,  and  Ontario  routes  westward, 
the  Philadelphia  and  Erie  Railroad  to  Erie,  and  the  Buffalo,  New  York 
and  Philadelphia,  and  the  Lehigh  Valley,  Northern  Central,  and  New 
York  Central  routes  to  Buffalo,  made  and  divided  between  different  com¬ 
panies  lower  joint  through  rates  over  longer  distances  than  ours  from 
Carbondale  to  Buffalo,  all  of  which  we  received;  so  that  at  equal  through 
rates,  like  coals  paid  our  rivals  less  rates  per  actual  mile  carried,  than  the 
same  rates  paid  to  us. 

Prudent  forethought  for  our  immediate  and  permanent  interests,  there¬ 
fore,  rendered  it  obligatory  for  the  essential  reasons  set  forth,  that  we 
share  with  our  coal  companies  and  connections  reasonable  concessions, 
based  upon  actual  sales  and  the  rates  known  to  have  been  made  by  com¬ 
peting  coal  companies  and  carriers,  in  order  to  secure  to  both  interests  just 
and  due  proportions  of  the  then  and  future  sales  and  transportation  of  their 
and  other  coal.  Such  rates  and  arrangements  and  none  other  were  so 
made.  The  coal  companies  simultaneously  reduced  the  prices  charged 
for  coal  consumed  by  this  railway;  waived  certain  of  their  prior  contract 
rights;  and  the  canal  company  further  agreed  to  carry  coal  over  its  rail¬ 
way  and  planes,  from  our  mines,  to  Honesdale  and  Carbondale,  and 
necessarily  passing  over  its  lines,  at  the  reduced  rates  per  mile  we  charged 
to  it;  and,  in  other  and  valuable  particulars,  assumed  its  proportions  of 
the  required  abatements. 

Our  concessions  were  made  principally  in  winter  months  when  our 
coal  cars  and  power  would  otherwise  be  comparatively  idle,  owing  to 
the  closing  of  lake,  river,  and  canal  navigation.  Your  action  in  retain¬ 
ing  our  own  and  diverting  other  coal  tonnage  from  competing  routes 
resulted  in  a  gain  of  coal  transported  by  us  to  tide  for  the  canal  com¬ 
pany  alone  of  11,780  tons,  or  29T7o8iy  per  cent,  in  December,  1876,  and 
January,  1877  (the  months  named  in  the  complaint),  over  the  same 
months  of  1875  and  1876;  in  a  gain  of  117,524  tons,  or  229  per  cent,  in  De¬ 
cember,  1877,  and  January,  1878,  over  the  same  months  in  1876  and  1877, 
and  a  gain  of  129,304  tons,  or  326T8^  per  cent,  in  December,  1877,  and  Jan¬ 
uary,  1878,  over  the  same  months  of  1875  and  1876.  The  rates  were  re¬ 
munerative  if  applied  only  to  the  periods  of  the  concessions;  but,  com¬ 
puted  over  the  longer  terms  of  the  improved  permanent  results  secured 
thereby,  the  action  was  needful,  wise,  and  profitable,  and  has  been  so 
demonstrated,  as  the  recent  coal  combination  secures  to  our  coal  compa¬ 
nies,  patrons,  and  this  railway,  percentages  of  the  total  production  and 
transportation  larger  than  could  otherwise  have  been  secured;  since 


26 


which  time  the  rates  have  been  advanced  to  their  original  basis  westward, 
and  are  rapidly  advancing  eastward.  We  transported  the  coal  at  the 
reduced  rate  with  fairer  profit  than  otherwise,  by  carrying  as  much  as 
possible  in  returning  box,  cattle,  and  gondola  cars. 

The  only  part  of  this  line  to  which  the  Delaware  and  Hudson  com¬ 
pany  guaranteed  100,000  tons  annually  was  the  three  miles  of  the  Ho¬ 
boken  Railroad  Company  from  Jersey  City,  and  that  guarantee  has  not 
been  waived  or  the  rates  thereon  reduced. 

The  next  charge  is  (folios  176  to  180,  inclusive),  that — 

“  On  or  about  the  28th  day  of  January ,  1876,  the  said  Jewett  fraudulently 
“  and  corruptly  entered  into  a  contract  with  one  John  R.  McPherson,  of  New 
u  Jersey,  and  caused  to  be  executed  by  said  stock  yard  company  to  the  said 
“McPherson,  pursuant  to  such  fraudulent  contract,  a  lease  of  all  the  yards  and 
“property  owned  and  controlled  by  said  stock  yard  company,  except  the  pro- 
“perty  known  as  the  Fortieth  street  yards,  in  the  city  of  New  York,  for  an 
“inadequate  consideration,  and  at  a  much  less  rental  than  other  and  responsible 
“parties  had  offered  and  were  ready  to  pay  therefor,  as  said  Jewett  well  knew, 
“  and  although  said  lease  did  not  include  said  Fortieth  street  yards,  and  said 
“stock  yard  company  was  liable  for  the  rent  of  the  same  to  the  amount  of  over 
“  $ 20,000  per  annum,  yet  said  Jewett  corruptly  caused  a  clause  to  be  inserted  in 
“said  lease  and  agreement,  whereby  the  Erie  Railway  Company  guaranteed 
“and  secured  to  said  McPherson  yardage  on  the  small  stock  billed  to  New 
“  York,  and  passing  into  said  Fortieth  street  yards,  and  thereby  deprived  said 
“stock  yard  company  of  such  yardage ;  and  the  plaintiffs,  upon  information 
“and  belief,  state  that  this  clause  alone  in  said  lease  is  a  loss  and  waste  of  the 
“trust  funds,  in  the  hands  of  said  receiver,  of  not  less  than  $ 50,000  per  annum. 
“  That  in  like  improvident  and  corrupt  manner  the  said  Jewett  caused  to  be  in- 
“  serted  in  said  lease  and  agreement  a  clause,  whereby  the  Erie  Railway  Com- 
“pany  agreed  to  pay  said  McPherson  the  sum  of  $ 1  for  each  and  every  stock 
“  car  unloaded  and  cleaned  by  him  at  Oak  Cliff  and  other  stations  on  the  Erie 
“Railway,  the  said  Jewett  well  knowing  that  said  price  was  exorbitant  and  un- 
“  just  to  the  Erie  Railway  Company,  and  that  responsible  parties,  as  plaintiffs 
“  are  informed  and  believe,  were  ready  and  desirous  of  taking  the  contract,  not 
“  only  of  unloading  and  cleaning  said  cars  for  nothing,  but  to  pay  for  the 
“manure  taken  from  said  cars  the  sum  of  $5  per  car  load ;  that  this  provision 
“in  said  lease  and  contract  has  caused  a  loss  and  waste  of  the  said  trust  fund 
“in  the  hands  of  said  receiver  of  many  thousand  dollars  per  annum;  that  said 
“  lease  and  contract  is,  in  many  other  respects,  onerous  and  unjust  to  the  Erie 
“Railway  Company.” 

Replying  thereto,  we  state: — 

Prior  to  the  said  contract,  its  proposed  terms  were  carefully  compared 
with  reliable  information,  and  the  text  of  similar  agreements  of  rivals  at 
New  York,  and  connecting  railways  elsewhere,  and  we  were  then,  and 
are  now  informed  and  believe,  that  the  contracts  of  other  railways  and 
stock  yards  at  New  York,  Jersey  City,  Philadelphia,  and  Boston,  which 
are  terminal  yards,  where  live  stock  is  offered  for  sale  and  delivered  to 


27 


consignees  without  being  reloaded  in  cars,  as  well  as  the  contracts  of  the 
Union  Stock  Yard  Companies  at  Chicago,  the  National  Stock  Yard  Com¬ 
pany,  at  East  St.  Louis,  the  United  Stock  Yards  Company,  at  Cincinnati, 
and  the  Union  Railroad  Transfer  and  Stock  Yard  Company,  at  Indian¬ 
apolis,  at  all  of  which  live  stock  is  unloaded,  sold,  and  again  reloaded 
into  cars,  are  each  and  all  upon  terms  not  more  profitable  or  more 
carefully  guarded  than  the  contract  with  McPherson. 

Prior  to  that  time  the  inefficient  management  of  the  National  Stock 
Yard  Company  had,  for  a  series  of  years,  caused  annual  loss  to  this  estate, 
in  lieu  of  the  present  guaranteed  income,  and  our  live-stock  traffic  and 
the  revenues  of  the  National  Stock  Yard  Company  had  also  been  reduced 
from  the  same  cause.  Its  sales  markets  were  small,  poorly  attended, 
and  realized  to  our  patrons  and  the  yards  less  returns  than  at  any  other 
sales  yards  in  or  adjacent  to  New  York.  After  we  acquired  their  control 
the  desire  to  correct  and  improve  these  results  was  made  generally 
known,  and  proposals  solicited  for  their  lease  or  other  management. 
The  aggregate  price  the  lessee  finally  agreed  to  pay  ($65,000,  in  addition 
to  the  Fortieth  street  yards),  was  and  is  largely  in  excess  of  the  proposals 
of  other  parties  therefor;  the  only  other  tenders  having  been  one  of  $36,000 
and  one  of  $60,000  per  annum,  the  first  excluding  and  the  latter  includ¬ 
ing  the  Fortieth  street  yards.  But  one-half  the  interest  in  the  Fortieth 
street  yards  was  controlled  by  the  National  Company  prior  to,  at  the 
time  of,  or  since  the  contract  with  McPherson.  The  Union  Stock  Yard 
Company,  connected  with  the  New  York  Central,  paid  for  the  remaining 
half  interest,  and  received  the  profit,  if  any,  thereunder.  The  lessee  is 
therefore  entitled  to  only  one-half  the  profits,  if  any,  at  Fortieth  street, 
and  was,  and  is,  required  to  assume  and  pay  all  the  obligations  of  the 
National  Company  for  its  interest  therein,  including  rentals,  repairs, 
maintenance,  enlargements,  labor,  &c.,  thereat.  The  guarantee  of 
the  lessee  covers  all  the  yards  upon  the  line,  and  he  determines  at 
what  point  or  points  to  collect  yardage,  but  he  has  none  other  than  the 
rights  to  collect  the  same  which  were  formerly  granted  to  and  exercised 
by  the  National  Company,  and  which  are  the  same  as  those  granted  to 
and  customary  with  all  similar  stock  yard  companies. 

The  yardage  charges  paid  to  the  stock  yards  by  this  railway  occur  at 
New  York  and  Jersey  City  only,  and  are  then  charged  as  agreed  and 
customary  by  and  between  the  New  York  Central,  Pennsylvania,  and 
this  railway,  and  in  co-operation  and  by  agreement  with  connections  of 
the  trunk  lines  to  Chicago,  St.  Louis,  Indianapolis,  Louisville,  Cincinnati, 
Columbus,  Detroit,  &c.,  and  intermediate  points.  The  agreed  public  and 
fixed  yardage  rates  upon  hogs  and  sheep  only  (not  cattle  in  any  event), 
are  always  added  to  the  rates  of  transportation  which  would  otherwise 
be  charged,  and  when  western  companies  divide  the  through  rates,  this 
allowance  is  specifically  given  to  all  the  trunk  lines,  over  their  usual 
shares.  Owners  or  consignees,  therefore,  pay  the  yardage,  and  not  the 
railways,  except  as  trustees,  and  all  other  yardage  and  all  charges  upon 


28 


cattle  as  well  as  upon  much  small  stock,  are  collected  by  the  lessee  from 
the  owners  or  consignee,  of  animals  yarded,  weighed,  sold,  fed,  watered, 
and  delivered. 

Live  stock  cars  could  be  unloaded  and  cleaned  more  economically  at 
the  prices  agreed  to  be  paid  to  the  lessees  of  the  stock  yards  than  to  hire 
laborers  therefor,  because  the  unloading  and  cleaning  is  done  by  the 
same  men  at  points  where  we  had  no  other  laborers;  and  our  current 
statements  indicate  that  the  remote  location  of  the  Oak  Cliff  yards  from 
the  resorts  and  homes  of  laborers,  added  to  the  necessities  for  unloading 
stock  promptly  at  all  hours,  has  caused  a  loss  to  the  lessee,  at  the  price 
agreed  to  be  paid  therefor,  which  price  also  includes  responsibility  for 
damage  to  animals  while  being  so  unloaded,  and  also  includes  unloading 
and  reloading  at  Deposit,  and  driving  animals  destined  to  New  York  on 
board  the  transfer  barges  at  Oak  Cliff.  The  cleaning  is  necessary  to 
prevent  damage  to  return  freights,  and  to  preserve  cars  from  rot;  and 
only  the  price  provided  in  former  contracts  between  the  National  Com¬ 
pany  and  this  railway  is  paid. 

No  proposals  have,  to  our  knowledge,  been  received,  nor  do  we  know 
parties  who  will  pay  $5.00  per  car  for  the  manure  taken  from  the  cars,  in 
addition  to  unloading  and  cleaning  them,  as  they  arrive,  and  we  believe 
such  allegation  to  be  false.  No  manure  of  appreciable  value  or  quantity 
is  taken  from  sheep  or  calf  cars.  It  takes  the  cleanings  of  40  cattle  and 
horse  cars  to  make  one  car  of  manure,  or  of  100  hog  cars  to  make  one 
car  of  manure,  which  would  make  the  manure  cost  from  one  hundred  to 
two  hundred  dollars  per  car-load,  beside  the  labor  of  unloading,  if  paid 
for  at  the  rate  named  in  the  complaint.  The  manure  was  reshipped 
over  and  paid  this  railway  local  rates  beyond  those  formerly  charged. 

The  net  revenue  derived  from  the  manure  unloaded  from  4,593  cars  at 
Oak  Cliff  for  the  calendar  year  1877  was  but  $677.50,  after  paying  our 
rates  of  transportation;  and  still  farther,  the  manure  is  sold  for  our 
account,  and  does  not  belong  to  the  lessee. 

The  next  charge  is  (page  45,  section  15,  folios  180  and  181): — 

“  And  the  'plaintiffs  further  show  that  said  receiver  made  unlawful  and 
“  fraudulent  contracts  with  one  Nelson  Morris  and  sundry  other  persons ,  where- 
“  by  he  paid  to  them  $ 15.00  for  each  and  every  car-load  of  cattle  shipped  over 
“  the  said  Erie  Railway  during  the  period  of  his  receivership.  That  the  said 
“  moneys  were  so  paid  out  of  the  trust  funds  in  the  hands  of  said  receiver ,  and 
“  have  amounted,  up  to  the  present  time,  to  over  four  hundred  thousand  dollars 
“  ($4,00,000),  for  which  no  adequate  services  were  rendered  to  the  estate .” 

This  brief  statement  is  false  in  the  following  particulars: — 

A.  There  is  no  contract. 

B.  There  is  no  fraud  in  the  payments  or  results. 

C.  Fifteen  dollars  is  not  paid  on  “ each  and  every  car  load  of  cattle 
11  shipped  over  the  Erie  Railway.” 

D.  The  total  amount  actually  paid  upon  cattle  within  the  period 
quoted  was  but  little  more  than  half  the  amount  alleged. 


29 


E.  Adequate  services  have  been  rendered  the  estate. 

In  proof  of  which  we  further  answer:  June  21st,  1875,  the  three 
trunk  lines  appointed  eveners  for  their  hog  and  cattle  traffic.  Mr.  Morris 
was  selected  as  the  cattle  evener  on  behalf  of  this  company.  The 
facts  and  objects  were  and  are  as  follows:  Every  prior  form  of  agree¬ 
ment  and  pool  for  the  maintenance  of  live-stock  rates  for  years  had 
failed.  The  number  of  western  railways  involved;  the  relations  of  some 
of  them  to  some  of  the  trunk  lines;  the  complications  of  western  and 
eastern  live  stock  markets;  the  facilities  afforded  this  trade,  unlike 
others,  to  stop  animals  at  sales  points,  transfer  its  ownership,  and  change 
its  destinations  more  than  once,  which  offered  opportunities  for  substitu¬ 
tion;  the  great  concessions  offered  large  shippers  by  through  lines  in 
joint  interest;  the  complications  of  stock-yard  interests,  and  the  ability  of 
large  forwarders  to  control  the  purchase  and  sale  markets  through  the  ex¬ 
cessive  drawbacks  formerly  allowed  to  them  by  the  railways — these  facts 
and  experiences  led  the  New  York  Central,  the  Pennsylvania  and  Erie 
companies,  and  some  of  their  connections  to  first  agree  upon  the  pro¬ 
portions  of  live  stock  arriving  at  New  York  to  which  each  trunk  line  was 
entitled;  and  they  then  agreed  with  certain  large  and  responsible  for¬ 
warders  that  if  they  would  actually  purchase  and  ship  stock  sufficient  to 
keep  upon  each  route  the  proportion  to  which  it  had  assented,  regardless 
of  markets  and  the  difficulties  above  referred  to,  that,  in  consideration 
of  such  purchases,  risks,  and  division,  they  would  pay  fifteen  dollars  per 
car  on  cattle  only,  only  when  they  came  from  or  through  the  western 
terminal  stations  of  the  trunk  lines,  and  when  destined  to  New  York 
only,  which  compensation  is  prorated  with  connecting  companies  from  the 
starting  points  of  through  rates.  We  do  not,  therefore,  pay  on  any  class 
of  stock  to  or  from  our  local  stations,  or  to  Philadelphia  or  Pennsylvania 
points,  or  other  competing  live  stock,  upon  all  of  which  the  equalizing 
plan  enables  us  to  now  maintain  better  rates. 

This  plan  has  also  accomplished  equality  of  New  York  rates,  and  in 
two  years  from  June  30th,  1875,  our  cattle  traffic  increased  9,434  cars,  or 
186  per  cent,  over  the  two  corresponding  years  next  preceding.  When 
the  plan  began,  the  cattle  and  hog  rate  from  Chicago  to  New  York  was 
25  cents  per  100  pounds;  it  is  now  55  cents,  and  the  cattle  rates  at  present 
average  two  and  one-half  times  the  rates  charged  upon  grain,  flour,  and 
provisions,  which  have  no  corresponding  method  of  division  and  mainte¬ 
nance  of  rates. 

The  charge  next  following  is  on  pages  46,  47,  48,  section  15th,  folio  182 
to  191,  inclusive,  being  in  substance  as  follows: — 

“  That  the  Lehigh  Valley  Railroad  Company  agreed  to  provide  a  third  rail 
11  of  steel,  with  joints,  to  be  laid  on  our  roadway  and  sidings,  from  Elmira  to 
“East  Buffalo,  at  a  cost  not  exceeding  $66.25  per  ton,  and  freights  to  Waverly 
“  added;  that  we  paid  that  price,  that  wrongful  and  fraudulent  over-payments 
“  were  made  therefor,  exceeding  $100,000;  that  even  the  amount  paid  the  Lehigh 


30 


“  Valley  company ,  $903,1+78.99,  added  to  the  actual  cost  of  labor  and  material 
“  used  in  making  it  ready  for  use,  did  not  exceed  $971+, 798. 15,  and  as  we 
11  charged  $1,060,032  in  our  accounts  therefor,  there  is  an  overstatement  of 
“$85,233.85.” 

The  authority  of  the  Supreme  Court,  granted  February  21st,  1876,  au¬ 
thorized  and  approved  a  contract  with  the  Pennsylvania  and  New  York 
Canal  and  Railroad  Company,  guaranteed  by  the  Lehigh  Valley  Railroad 
Company,  for  laying  a  third  rail  upon  both  tracks  of  the  Erie  Railway 
from  Elmira  to  East  Buffalo.  Its  value  to  this  company  was  derived  from 
the  following  facts: — 

The  Buffalo,  New  York  and  Philadelphia  Railroad  had  been  opened 
from  Buffalo  to  Philadelphia  under  the  patronage  of  the  Pennsyl¬ 
vania  Railroad  Company.  The  Lehigh  Valley  company  had  acquired 
interests  since  resulting  in  purchases  by  it  of  the  Geneva,  Ithaca  and 
Sayre,  and  Cayuga  Shore  roads,  and  had  made  large  cash  advances  to  the 
Southern  Central,  by  all  of  which  connecting  routes  were  established  be¬ 
tween  Philadelphia  and  Pennsylvania  points,  and  Rochester,  Buffalo  and 
beyond,  via  the  New  York  Central,  and  all  of  them  rival  to  the  Erie,  in 
addition  to  the  former  through  route  of  the  Northern  Central  and  New 
York  Central.  Those  routes  were  diverting  the  increasing  western  Phila¬ 
delphia  and  Pennsylvania  coal,  freight,  and  passenger  traffic,  near  and 
tributary  to  our  line,  away  from  our  route  with  its  two  transfers,  and  the 
said  contract  was,  for  these  and  other  reasons,  carefully  entered  into. 

The  price  to  be  paid  for  the  steel  rails  was  to  be  deducted  from  the 
thirty  subsequent  monthly  balances  arising  mainly  from  increased  traffic; 
it  was  the  market  price  paid  by  various  railways  for  like  steel  at  the  same 
time,  and  we  are  advised  it  was  the  price  paid  to  its  manufacturers  by 
the  Lehigh  Valley  company,  partially  in  consideration  of  the  promptness 
with  which  it  was  delivered  in  anticipation  of  Centennial  traffic. 

The  rail  was  laid  with  due  and  proper  economy  by  our  own  employes; 
the  full  sums  charged  were  actually  paid  for  the  rails,  joints,  spikes,  bolts, 
transportation,  labor  of  altering  switches,  cutting  ties,  providing  frogs, 
connections,  and  sidings,  and  laying  the  rail.  All  the  material  charged 
to  us  by  the  Lehigh  Valley  was  received  and  used,  no  portion  having 
been  abstracted  or  misapplied,  and  the  portion  of  material  we  purchased 
was  at  the  lowest  rates,  and  providently  and  economically  used. 

The  chief  engineer’s  prior  estimate  was  $1,042,662. 

In  laying  this  rail  it  was  found  that  if  iron  rails  were  substituted  for 
steel  upon  the  sidings,  we  could  have  2,033  tons  of  new  steel  for  our  main 
line,  where  it  was  needed,  and  with  the  written  consent  of  the  Lehigh 
Valley  company,  now  on  file,  it  was  so  laid,  all  of  it  west  of  Elmira,  and 
upon  the  main  tracks  having  three  rails. 

The  results  this  rail  and  connection  have  accomplished  are  as  follows: 
It  secured  to  us  the  large  Centennial  traffic  of  the  year  1876.  Com¬ 
paring  the  nineteen  months  of  its  use,  from  June  1st,  1876,  to  December 
31st,  1877,  with  the  next  prior  nineteen  months,  we  increased  216  per 


31 


cent,  in  number  of  passengers  exchanged  with  the  Lehigh  Valley,  with 
an  increase  of  515  per  cent,  in  our  passenger  revenues  therefrom, 
because  of  the  large  increase  in  through  travel.  In  the  same  periods 
there  was  an  increase  in  coal  received  by  us  from  the  Lehigh  Valley 
of  242,577  tons,  or  76  per  cent.,  that  company  having  guaranteed  us 
250,000  tons  of  coal  per  annum  in  the  contract.  Our  general  freights, 
other  than  coal,  increased  156,666  tons,  or  78  per  cent.,  with  gains 
in  our  revenues  from  the  freights,  excluding  coal,  of  $138,121.86,  or  43 
per  cent.  Without  the  third  rail  not  only  this  increase,  but  much  of  the 
former  traffic  would  have  been  diverted  to  the  stated  rival  routes,  and  we 
believe  that  comparatively  as  favorable  results  will  follow  the  change  of 
gauge  of  the  entire  line.  Had  this  contract  been  delayed  until  the 
Lehigh  Valley  purchased  the  more  northern  railway  lines  referred  to,  as 
it  has  since  done  under  foreclosures,  that  company  would  not,  in  our 
opinion,  have  provided  the  funds  needful  to  lay  the  third  rail,  and  we 
could  not,  as  now,  have  paid  for  it  from  permanent  increased  and 
guaranteed  traffic. 

The  rail  also  established  valuable  connections  with  the  narrow-gauge 
roads  of  the  Northern  Central;  Utica,  Ithaca  and  Elmira,  and  Tioga  rail¬ 
road  companies,  as  well  as  with  our  western  narrow-gauge  connections 
for  Pennsylvania  and  Philadelphia  business,  and  to  that  extent  reduced 
our  transfer  expenses  at  Buffalo,  and  aided  the  increase  of  our  equip¬ 
ment  by  the  use  of  the  narrow-gauge  cars  of  connecting  lines. 

It  has  also  a  large  prospective  value,  looking  to  its  extension  from 
Waverly  to  Binghamton,  by  which  our  narrow-gauge  New  England  con¬ 
nections  are  expected  to  be  made.  We  are  assured  that  the  present 
active  construction  of  the  Boston,  Hoosac  Tunnel  and  Western  Railway 
by  prominent  Boston  capitalists,  by  which  we  hope  to  secure  within  this 
year  a  large,  steady,  permanent,  and  valuable  new  traffic  to  and  from 
New  England,  which  all  administrations  of  this  company  have  sought  for 
years  at  large  expenditures,  would  not  have  been  commenced  but  for 
the  laying  of  this  third  rail,  and  this  important  project  largely  influ¬ 
enced  the  purpose  and  belief  in  the  ultimate  value  of  the  Lehigh  Valley 
contract.  It  is  also  a  large  factor  in  the  ultimate  narrow-gauging  and 
economical  results  of  this  railway,  in  enabling  us  to  commence  the 
narrowing  of  power  and  cars,  and  is  a  valuable  nucleus  to  the  farther 
gauge  and  roadway  improvements  proposed  to  be  made  through  the 
intended  reorganization. 

The  charge  next  following  is  (page  48,  section  15,  folios  191,  192,  and 
193):— 

“  That  all  or  most  of  the  freight  passing  by  the  Erie  Railway  to  and  from 
“New  York  is  carried,  or  procured  to  be  carried,  over  the  Hudson  river  by  the 
“  said  Erie  Railway  Company. 

“  That  the  said  Jewett  has  made  extravagant  and  improvident  contracts  with 
“the  New  Jersey  JAghterage  Company  and  other  carriers,  for  the  transportation 


32 


“of  such  freights  across  the  said  river ,  at  rates  much  above  fair  and  reasonable 
“ rates  of  compensation,  and  much  above  the  rates  for  which  such  transportation 
“  could  and  should  have  been  effected,  as  said  Jewett  well  knew. 

“And  the  plaintiffs  charge  and  aver,  upon  information  and  belief,  that  the 
“said  Jewett  and  other  officers  of  the  Erie  Railway  Company  were  and  are  in- 
“  terested  in  the  said  New  Jersey  Lighterage  Company,  and  are  stockholders 
“therein,  and  were  influenced  and  induced  to  the  making  of  such  contracts  by 
“  such  personal  interest,  in  fraud  of  the]  said  Erie  Railway  Company  and  its 
“stockholders.” 

This  assertion  contains  the  following  misstatements: — 

A.  No  contract  exists  or  has  existed  with  the  New  Jersey  Lighterage 
Company  since  your  connection  with  the  Erie. 

B.  The  same  is  true  of  all  other  harbor  carriers. 

The  services  are  paid  for  as  rendered,  but  without  contracts. 

C.  The  rates  are  not  above  fair  and  reasonable  charges. 

D.  The  rates  are  not  above  those  for  which  transportation  could  be 
effected. 

Our  rivals  and  other  companies  at  New  York  have  furnished  us  the 
rates  paid  by  them  to  contractors  on  their  entire  harbor  traffic;  and 
they  are  in  every  instance  much  greater  than  the  rates  paid  by  us  on  a 
small  part  of  our  own. 

E.  We  annex  hereto  (marked  B)  the  affidavit  of  the  president  of  the 
New  Jersey  Lighterage  Company,  that  no  present  officer  of  the  Erie  com¬ 
pany  has  or  has  had  any  interest  in  his  company  as  a  stockholder,  or 
otherwise,  and  that  we  have  reduced  his  rates  since  your  connection  with 
this  railway.  The  further  facts  are  that  constantly  decreasing  quantities 
of  property  are  transferred  to  and  from  this  railway  by  the  lighterage 
company,  and  only  from  day  to  day,  as  may  be  ordered  by  merchants 
or  otherwise.  Our  payments  to  it  for  the  thirty-one  months  of  this 
receivership  to  December  31st,  1877,  aggregated  but  $77,199.49,  or  less 
than  $2,500  per  month,  and  $118,000  less  than  the  amount  paid  for  the 
corresponding  next  prior  period.  This  arises  from  reductions  in  the  rates 
paid  as  well  as  from  the  performance  of  the  transfer  of  increased  quan¬ 
tities  by  our  own  employes. 

The  only  other  harbor  carrier,  whose  services  we  pay,  transfers  grain, 
because  we  have  not  the  requisite  tugs  and  grain  boats  therefor,  and  be¬ 
cause  it  could  not  be  performed  by  us  at  less  than  the  prices  now  paid;  and 
we  are  informed,  believe,  and  affirm,  that  the  rates  paid  by  us  therefor 
are  but  about  one-half  the  average  prices  paid  by  other  companies  at 
New  York  for  their  grain  transfers  and  deliveries. 

Of  our  entire  tonnage  received  and  delivered  in  the  harbor  of  New  York 
for  the  last  fiscal  year,  the  lighterage  and  grain  freights  aggregated  but  19 
per  cent,  of  the  total,  and  the  remainder  was  handled  by  and  transferred 
upon  our  barges  and  by  our  tugs  and  employes. 

The  next  charges  are  as  follows  (page  49,  section  16,  folios  195  and 
196):— 


33 


11  That  the  said  Jewett  has  made  excessive ,  unwarranted,  and  improper  re- 
“  hates  and  commissions  upon  charges  for  transportation  of  coal,  cattle,  oil,  and 
“  other  freight.  That  among  others  to  whom  such  rehates  were  made,  were  the 
“  National  Stock  Yard  Company,  the  Central  Stock  Yard  and  Transportation 
“  Company,  the  Standard  Oil  Company,  the  Erie  and  North  Shore  Line,  the 
“  Great  Western  Despatch  Company,  the  Acme  Oil  company,  Charles  Pratt  & 
“  Co.,  C.  B.  V.  Ward  &  Co.” 

We  answer: — 

The  rebates  and  commissions  upon  our  charges  for  transportation,  after 
being  properly  and  carefully  prepared  and  certified  by  the  general 
freight  and  passenger  agents,  pass  the  inspection  of  each  and  all  the 
undersigned,  and  we  aver  that  the  above  charges  are  unfounded,  ignorant, 
and  malicious.  Much  the  largest  parts  of  all  sums  so  paid  were  under 
agreements  with  rival,  and  the  authority  of  connecting,  carriers,  who  pay 
their  several  and  aggregate  large  proportions  thereof.  In  such  cases 
they  are  mainly  charged  to  our  co-operative  fast  freight  lines  under  the 
contracts  in  Appendix  (marked  C),  pass  the  inspection  of  their  general 
managers,  and  the  final  audit  of  all  the  railways  in  interest  before  payment. 

As  to  the  smaller  portion  of  drawbacks  paid  upon  our  local  traffic,  full 
rates  were  first  collected  to  secure  penalties  for  the  non-performance  of 
the  promises  or  agreements  of  forwarders  to  increase  quantities,  in  speci¬ 
fied  periods;  to  encourage  new  or  foster  old  traffic,  or  for  other  reasons 
known  as  proper,  customary,  satisfactory,  and  within  the  authority  given 
you  for  the  management  of  this  railway. 

Replying  specifically  to  the  charges  as  applied  to  each  of  the  parties 
named,  we  affirm: — 

During  this  receivership,  no  rebates  or  sums  whatever  have  been  paid 
to  the  National  Stock  Yard  Company,  or  the  Central  Stock  Yard  Com¬ 
pany,  other  than  sums  agreed  to  be  paid  to  them  by  contracts;  that  no 
rebates  in  the  customary  sense  have  been  agreed  to  be  paid,  paid,  or 
are  due  to  either  of  them,  and  the  only  amounts  which  we  have  paid 
them  have  been  for  yardage  of  live  stock,  and  the  unloading  of  cars,  as 
detailed  in  the  section  of  this  paper  relating  to  the  McPherson  contract, 
and  for  certain  services  aggregating  not  more  than  $250  per  month,  ren¬ 
dered  to  this  company  for  labor  at  Buffalo,  which  we  would  otherwise 
have  to  supply  at  equal  or  greater  cost. 

The  next  charge  relates  to  the  Erie  and  North  Shore  and  Great  Western 
Despatch  Fast  Freight  lines. 

The  Erie  Railway,  with  thirty -seven  of  its  connections,  are  the  sole 
parties  to  the  contracts  for  their  formation,  operations,  receipts,  expenses, 
and  results.  They  are  both  governed  by  boards  of  managers  or  directors, 
consisting  of  one  officer  from,  and  designated  by,  each  railway  in  interest. 
All  their  officers,  agents,  and  employes  are  engaged  at  fixed  salaries,  and 


34 


there  are  not  and  cannot  be  any  private  interests,  gains,  or  emoluments 
whatever  in  their  operations  or  results,  and  they  are  not  companies.  They 
are  merely  the  designations  or  trade  marks  of  certain  routes  for  marking 
and  the  quicker  dispatch  of  goods,  as  freight  trains  are  designated  by 
numbers,  or  passenger  trains  by  titles.  All  of  the  railways,  parties 
thereto,  act  co-operatively  under  the  two  said  contracts,  and  each  and  all 
share  any  and  all  profits,  gains,  rates,  drawbacks,  concessions,  advantages, 
or  disadvantages  whatever  in  their  business,  and  pay  their  total  expenses 
in  the  proportions  of  their  several  earnings  in  said  lines,  which  are  ascer¬ 
tained  and  stated  monthly  at  a  meeting  of  the  railway  freight  officers 
of  the  companies  in  interest,  by  whom  their  forms,  systems,  vouchers, 
and  accounts  are  fixed  and  regulated,  upon  personal  examinations. 
All  railway  officers  interested  and  present  at  the  monthly  meetings  sign  a 
joint  certificate  of  audit,  upon  which  the  expenses  are  refunded  each 
month,  to  keep  full  their  capital  or  managing  funds,  which  are  con¬ 
tributed  entirely  by,  and  belong  only  to,  the  railways  in  interest.  Their 
managers  and  agents  have  no  power  whatever  to  make  or  change  rates, 
agree  to  drawbacks,  collect  or  refund  moneys,  or  do  anything  but  solicit 
traffic  at  rates  fixed  solely  by  the  railway  companies,  or  take  such  other 
action  as  the  railways  authorize.  We  make  these  explicit  statements  and 
attach  a  copy  of  the  North  Shore  contract  in  Appendix  (marked  C)  to 
disprove  effectually  false,  ignorant,  and  malicious  statements  of  their 
character,  scope,  and  operation,  which  have  been  persistently  repeated. 
This  railway  formerly  had  fast  freight  lines  covering  private  interests,  the 
last  of  which  was  entirely  eliminated  by  your  order,  May  1st,  1875. 

While  we  have  but  two  freight  lines,  the  New  York  Central  has  seven, 
the  Pennsylvania  Railroad  Company  has  three,  and  the  Baltimore  and 
Ohio  Railroad  two. 

The  charges  relating  to  the  Acme  Oil  Company ,  which  is  a  western 
forwarder,  and  Charles  Pratt  and  Company ,  Brooklyn  consignees  for  oil, 
are  answered  in  the  clause  hereof  relating  to  the  Standard  Oil  Company. 

C.  B.  V.  Ward  Sc  Co.,  mentioned  in  the  complaint,  is  probably  intended  for 
C.  Y.  V.  Ward  who  is  the  ticket  agent  of  the  general  passenger  office, 
to  and  through  whom  only  the  miscellaneous  expenses,  including  a  few 
passenger  commissions  are  paid,  in  amounts  which  have  averaged  but 
$300.89  per  month  during  your  receivership  to  January  1st,  1878. 

Upon  page  1^9,  section  16,  and  in  folios  196  to  202  inclusive,  the  com¬ 
plaint  charges  more  fully  as  to  the  Standard  Oil  Company,  in  substance  as 
follows: — 

“  That  we  have  continued  in  operation  a  fraudulent  contract  with  the  Stand- 
“  ard  Oil  Company ,  of  date  April  7th,  187 J^,  for  transporting  oil  to  Weehawken 
“at  rates  no  higher  than  it  paid  other  lines;  that  it  contained  no  provisions  ex- 
“  empting  us  from  carrying  freights  at  less  than  cost;  that  it  could  be  abrogated 


35 


by  six  months’  notice,  which  was  not  given,  but  continued,  so  that  we  carried  its 
“oil  at  great  loss  to  this  railway,  said  loss  amounting  to  $285,235.88  less  than 
-“we  could  have  received  in  three  specified  months  had  we  charged  the  one  cent 
'“per  ton  per  mile,  which  the  complaint  charges  is  the  lowest  reasonable  or  re- 
“  munerative  rate  for  such  transportation.” 

This  statement  is  false  in  the  following  particulars: — 

A.  The  contract  of  April  7th,  1874,  made  by  your  predecessor,  and 
named  in  the  complaint,  was  discontinued  by  your  order  March  1st, 
1875. 

B.  The  contracts  substituted  therefor  were  carefully  considered;  are 
made  for  no  fixed  periods,  and  can  be  annulled  at  fifteen  days’  notice, 
which  renders  provisions  exempting  us  from  carrying  oil  at  loss,  needless. 

C.  Substantially  the  same  contracts  as  our  own  as  to  rates  and  condi¬ 
tions  have  been  and  are  still  in  force  with  the  New  York  Central,  Penn¬ 
sylvania,  and  Baltimore  and  Ohio  roads. 

D.  To  believe  that  we  could  secure  oil  at  higher  rates  than  those 
charged  by  other  trunk  lines,  or  that  it  was  more  profitable  to  decline  its 
carriage  for  a  brief  period  of  low  rates,  lay  up  our  idle  cars  and  power, 
•and  risk  the  loss  of  the  traffic  to  the  extent  we  surrendered  it  when  rates 
^advanced  and  would  continue  to  rule  high,  is  a  striking  characteristic 
of  the  ignorance  and  malice  of  the  complaint. 

E.  To  set  up  one  cent  per  ton  per  mile  as  the  minimum  of  profitable 
rates  when  the  gross  annual  tonnage  of  all  the  trunk  lines  in  their  last 
fiscal  years,  including  the  period  cited,  average  less  than  that  sum,  is  a 
sufficient  answer  to  that  portion  of  the  complaint. 

The  contracts  made  were  rendered  necessary  by  the  large  extent  of 
the  business,  its  peculiar  character,  the  limitation  of  our  risks,  the  uses 
of  our  oil  yards  at  Weehawken,  and  the  relations  of  both  contracting 
parties  to  connecting  and  rival  lines,  as  well  as  to  the  port  of  New  York. 
The  contracts  do  not  name  rates,  and  since  their  dates  we  have  accepted 
only  our  proportion  of  such  rates  as  were  made  by  agreement  between 
the  trunk  lines  and  their  several  connections,  all  of  which  have  been 
first  authorized  and  the  property  started  and  delivered  to  us  by  the 
receiver  of  the  Atlantic  and  Great  Western  and  by  the  Lake  Shore  com¬ 
panies.  Had  we  declined  its  carriage  the  Atlantic  and  Great  Western 
would  have  lost  its  eastward  transportation.  At  only  one  brief  period 
were  the  rates  of  questionable  profit,  which  resulted  from  the  action  of 
the  Pennsylvania  Railroad  from  causes  in  which  we  had  no  part,  and 
•since  adjusted  to  give  us  an  increased  proportion  of  all  the  oil  arriving  at 
the  seaboard,' and  at  rates  now  as  high  as  have  ever  prevailed  on  oil 
freights  via  any  of  the  trunk  lines  sinoe  our  connection  with  this  railway. 
At  this  time  the  oil  rates  from  Cleveland  and  Oil  City  to  New  York  are 
more  than  double  other  fourth-class  freights,  while  the  oil  moves  in 
much  larger  quantities,  and  the  contracts  exempt  us  from  fire  and  other 
xisks. 

The  average  of  the  oil  rates  in  any  and  every  of  our  fiscal  years  has 


36 


been  more  profitable  than  any  other  of  our  eastward  through  freights, 
and  are  rendered  more  so,  as  we  have  received  a  specific  charge  upon 
every  barrel  of  oil  delivered  at  Weehawken,  as  all  New  York  oil  has  been, 
while  the  New  York  Central  Company  at  the  same  through  rates,  but  in 
the  absence  of  like  oil  docks,  has  paid  from  its  like  proportion  a 
lighterage  to  Hunter’s  Point,  adjacent  to  Brooklyn,  on  all  its  share  of 
said  oil. 

An  average  of  forty-eight  per  cent,  of  the  oil  arrives  at  Weehawken 
in  cars  which  we  mainly  reload  upon  their  return  with  coal  from  Car- 
bondale,  Waverly,  Elmira,  and  Corning  at  profitable  rates,  and  for  these 
reasons  the  carriage  of  the  oil  was  equally  or  more  profitable  to  us 
than  to  rival  carriers  transporting  oil  between  the  same  points  at  equal 
rates  and  divisions,  but  without  such  or  other  return  freights.  Still 
further,  our  oil  traffic  for  the  period  of  your  receivership  to  January 
1st,  1878,  increased  2,103,160  barrels  over  the  same  period  next  prior 
thereto,  and  at  better  average  rates. 

The  foregoing  statements  as  to  the  Standard  Oil  Company  are  equally 
true  as  to  Charles  Pratt  &  Co.  and  the  Acme  Oil  Company. 

We  notice  the  following  charge  (page  49,  section  16,  folio  195): — 

“  That  he  ( the  receiver )  has  placed,  and  kept  in  office  and  in  the  employment 
“of  the  company  numerous  dishonest,  idle,  and  incompetent  persons,  many  of 
“them  his  relatives  and  personal  friends,  and  many  of  them  in  positions  en- 
“tirely  sinecure,  to  the  great  detriment  and  waste  of  the  said  trust  estate .” 

Of  the  total  number  of  persons  in  the  employ  of  this  railway  in  March, 
1878,  all  of  them  but  95  are  in  the  departments  of  the  undersigned;  and 
the  charge  that  either  dishonest,  idle,  and  incompetent  persons  are  inten¬ 
tionally  retained  is  untrue.  It  is  impossible,  considering  their  large 
number,  to  certify  to  the  actual  character  of  each  and  all  of  them,  but 
dishonesty  is  promptly  punished,  idleness  and  incompetency  are  met  by 
prompt  and  permanent  dismissal,  and  the  systems  of  accountability, 
inspection,  and  supervision  are  so  complete  that  statements  to  the  con¬ 
trary  are  utterly  without]  foundation. 

Of  the  whole  number  of  employes  in  all  departments  a  careful  investi¬ 
gation  shows  but  two  persons  now  in  the  service  in  any  way  connected 
with  yourself;  not  more  than  five  persons  have,  within  our  united  de¬ 
partments,  been  appointed  upon  your  recommendation  or  request,  and 
but  three  of  the  latter  are,  to  our  knowledge,  now  in  the  service. 

The  statement  that  sinecure  positions  exist  in  this  company  is  untrue, 
as  a  comparison  of  its  staff  with  the  other  trunk  lines  indicates  that  the 
line  is  operated  with  fewer  general  officers  and  agents  than  either  of  the 
trunk  lines  with  which  our  results  are  compared. 

The  complaint  next  proceeds  to  charge  (page  52,  section  16,  folio  206), 
as  follows: — 


37 


“  That  among  the  other  contracts  improperly  made  and  continued  by  the 
11  said  Jewett  as  receiver  as  aforesaid  are  the  contracts  of  the  Pennsylvania  Com- 
“  pany  and  the  contract  of  the  Tioga  Railroad  and  the  Blossburg  Coal  Com- 
“ pany,  a  contract  with  Homer  Ramsdell,  and  a  contract  with  the  United  States 
u  Express  Company 

Replying  thereto,  we  say :  The  eastward  contracts  of  the  Pennsylvania 
Coal  Company  are  those  in  existence  prior  to  your  or  our  connection 
with  this  railway.  A  careful  examination  and  comparison  shows  that 
they  are  desirable;  that,  owing  to  the  cheaper  prices  of  coal  and  other 
causes  operating  at  this  time  they  could  not  be  renewed  as  favorably  as 
when  they  were  made,  and  that  they  secure  to  us  as  high  average  rates 
as  are  paid  by  any  other  coal  company  to  its  transporter  within  com¬ 
peting  districts  and  periods  upon  like  coals  for  equal  distances. 

The  westward  contract  with  the  same  company,  made  by  yourself, 
secures  to  us  all  its  westward  coal  at  rates  the  same  as  those  charged  via 
longer  rival  routes,  in  addition  to  which  it  placed  upon  our  line  400  im¬ 
proved  coal  cars  of  a  capacity  of  fifteen  tons  each,  to  utilize  more  fully 
our  third  rail,  and  upon  terms  that  we  were  and  are  unable  to  get  any 
other  parties  to  adopt.  These  cars  are  to  become  our  property  upon  the 
payment  of  only  the  sum  usually  allowed  by  other  lines  for  the  mere 
mileage  of  like  cars  until  their  cost  is  cancelled.  All  the  terms  of  the 
westward  agreement  were  first  assented  to  by  the  Lehigh  Valley  Com¬ 
pany  as  equitable  and  customary. 

The  joint  contract  with  the  Tioga  Railroad  and  Blossburg  Coal  Companies 
was  required  by  the  completion  of  their  new  railway  to  a  new  junction 
with  our  own  at  Elmira,  instead  of  connecting  at  Corning  as  before. 

It  reduced  the  price  paid  by  this  railway  for  its  coal  from  $2.50  per  ton 
to  $2.15,  and  waived  the  former  guarantee  to  purchase  150,000  tons  per 
annum.  It  is  more  profitable  than  the  one  formerly  existing,  and  secures 
to  us  better  rates  per  ton  per  mile  than  are  paid  to  the  New  York 
Central  routes  for  the  carriage  of  the  same  bituminous  coal  over  its 
greater  distances. 

The  contract  with  Homer  Ramsdell  is  of  date  October  13th,  1869,  under 
which  he  was  to  build  and  did  construct  fifty  box  cars,  in  consideration 
for  sending  certain  local  freights  via  Newburg  and  his  barges;  the  cars  to 
be  paid  for  in  instalments.  There  is  now  due  to  Mr.  Ramsdell  $7,000. 
He  is  willing  to  release  the  company  from  its  terms  upon  payment  of 
the  balance  at  any  time  we  desire,  but  it  has  not  been  deemed  best  to 
so  discontinue  it. 

As  to  the  contract  with  the  United  States  Express  Company,  no  contract 
upon  our  records  was  more  thoroughly  and  minutely  considered.  It  is  pro¬ 
fitable  and  desirable,  upon  a  basis  carefully  ascertained  to  be  customary 
with  other  competing  railways  and  express  companies,  after  full  com- 


38 


parisons  with  various  other  like  agreements  known  and  shown  to  us,  and" 
was  rendered  necessary  by  the  competition  of  rival  routes  with  both  the- 
railway  and  express,  which  had  reduced  express  as  well  as  railway 
freight  rates.  It  farther  transferred  to  this  company  5,000  shares  of 
fully  paid-up  stock  in  consideration  of  the  said  contract  and  in  settle¬ 
ment  of  old  and  disputed  items  of  account. 

The  complaint  proceeds  to  say  (page  52,  section  16,  folios  207  and  208): — 

“That  in  the  early  part  of  the  year  1876  the  said  Jewett,  as  such  receivcrr- 
“ made  numerous  improvident  and  unprofitable  contracts  with  shippers  of 
“  through  freights  over  the  Erie  Railway  Company  for  transportation  of  through 
“freights,  for  the  period  of  one  year  from  the  respective  dates  of  such  contracts, 
“  at  less  than  the  cost  of  transportation  thereof  to  the  Erie  Railway  Company, 
“  and  that  such  contracts  included  and  embraced  the  greater  portion  of  the 
“through  freight  carried  by  the  said  Erie  Railway  Company  during  the  said 
“year.  And  plaintiffs  further  charge  and  aver,  upon  information  and  belief 
“  that  the  said  contracts  were  manifestly  and  clearly  improper  and  unprofitable, 
“and  are  known  to  the  said  Jewett  so  to  be,  and  that  certain  of  the  principal 
“officers  of  the  said  Erie  Railway  Company  were  interested  therein  and  made 
“  large  profits  therefrom,  and  that  said  contracts  were  carried  out  by  the  said 
“  Jewett  to  the  great  loss  of  the  trust  estate  in  his  hands  as  receiver  aforesaid .” 

This  statement  contains  the  following  that  is  false: — 

A.  The  contracts  did  not  “embrace  the  greater  portion  of  the  through 
11 freight  carried  by  the  Erie  Raihvay  during  that  year.”  None  were  made 
upon  any  eastward  through  freights,  which  is  the  vast  majority  in  ton¬ 
nage  and  revenue. 

B.  They  were  neither  improper  nor  unprofitable. 

C.  None  of  the  principal  or  other  officers  had,  or  could  have,  by  any 
methods,  any  interests  therein  or  profits  therefrom.  The  systems  of 
making,  examining,  auditing,  and  paying  them  by  38  railroads  in  interest,, 
as  before  detailed,  absolutely  precluded  even  a  foundation  for  such  a 
statement.  They  were  made  at  the  rates  of  other  routes,  and  no  shipper 
or  receiver  would  pay  to  or  share  anything  with  any  officer  or  agent  of 
this  company  to  obtain  rates  which  were  freely  and  openly  offered  by  any 
and  all  rival  lines.  We  attach  the  affidavit  (marked  D)  of  the  general 
traffic  manager  of  the  New  York  Central  Railroad  in  confirmation  of  the 
fact  that  that  line  made  similar  contracts,  and  that  no  personal  benefit 
could  accrue  from  them.  Yourself  and  every  proper  officer  of  this  com¬ 
pany  used  every  means  to  avoid  them,  as  is  of  abundant  record,  but 
unsuccessfully,  and  none  were  authorized  via  this  railway  until  those 
efforts  failed,  and  we  had  ample  information  that  they  were  being 
numerously  made  by  rival  routes.  The  alternative  was  then  presented 
to  have  returning  business  for  cars  which  would  otherwise  go  west 
empty,  and  could,  therefore,  be  moved  at  a  scarcely  appreciable  dif¬ 
ference  of  cost,  or  relinquish  the  business  to  rival  routes,  as  no  reasons- 
existed  why  shippers  would  pay  us  higher  rates  than  to  our  better- 


39 


equipped  non-transfer  rivals.  If  we  carried  the  freights  at  the  rates  and 
for  the  periods  known  to  be  guaranteed  by  the  New  York  Central  and 
its  connections,  and  openly  offered  by  the  Pennsylvania,  we  believed  that 
upon  their  expiration  the  Erie  would  thereafter  control  its  share  of  the 
traffic  at  the  full  prices.  If  we  declined  we  would  risk  the  entire  loss  of 
competing  westward  traffic  for  about  one  year,  which  would  result  in 
equal  or  greater  losses  eastward,  which  combined  losses  would  not  only 
be  absolute  for  their  duration,  but  more  or  less  affect  subsequent  periods, 
because  at  even  rates  merchants  cling  to  the  companies  first  giving  and 
continuing  their  former  special  rates.  The  agreements  were,  therefore, 
made  with  a  clear  profit,  both  in  the  immediate  carriage  and  greater 
subsequent  profit,  as  follows: — 

Since  July,  1877,  a  division  of  west-bound  competitive  business  from 
New  York  has  existed  among  the  trunk  lines,  and  we  were  able,  by 
retaining  our  full  share  of  westward  traffic  at  the  time  referred  to,  and 
in  the  manner  indicated,  to  secure  33  per  cent,  of  the  total  westward 
tonnage,  which  is  as  much  as  any  other  carrier  received,  and  the  profits 
of  this  later  period  have  been  since  then  and  are  now,  and,  it  is  hoped, 
will  continue,  greatly  in  excess  of  those  during  the  periods  of  the  said 
contracts.  The  trunk  line  commissioner  certifies  that  our  increase  in 
net  earnings  therefrom  from  July  1st,  1877,  to  March  31st,  1878,  was 
$642,015.24  over  the  larger  tonnage  for  the  corresponding  period  of  the 
prior  year.  The  larger  part  of  this  later  profit  would  have  been  lost  to 
this  railway  if  we  had  not  carried  the  property  at  the  rates  of  the  prior 
period. 


HAYING  thus  fully  answered  the  charges  made  in  the  complaint  of 
Charles  Potter  and  others,  and  shown  them  to  be  untrue  in  every 
particular,  it  is  but  just  to  you  to  show  that  notwithstanding  the  disad¬ 
vantages  we  have  enumerated  in  the  management  of  the  Erie  property, 
your  administration  has  accomplished  the  following  comparative  and 
positive  results.  Some  repetition  cannot  be  avoided  in  a  full  summary: — 
1.  The  gross  tonnage  for  the  last  fiscal  year  indicated  a  gain  of  209,633 
tons  over  the  next  prior  year. 

The  following  is  a  comparison  of  the  gross  tonnage  of  the  trunk  lines, 
as  shown  by  their  annual  reports  for  the  fiscal  years  stated,  included  in 
your  receivership  of  this  estate: — 


Termination  of  fiscal  year. 

N.  Y.  Central. 

Pennsylvania 

proper. 

Balt.  &  Ohio. 
Through  and 
coal. 

Erie. 

1876 . 

6,803,680 

6,351,356 

9,922,911 

9,738,295 

2,280,682 

2,117,071 

5,972,818 

6,182,451 

1877 . 

Loss . 

452,324 

184,616 

163,611 

Gain . 

209,633 

Showing  that  the  Erie  was  the  only  trunk  line  which  transported  an 
increased  tonnage  in  1877  over  1876. 

The  tonnage  of  the  Pennsylvania  Railroad  for  the  year  1876  included 
its  large  transportation  of  material  for  Centennial  buildings  and  exhi¬ 
bition. 

Our  last  fiscal  year  included  the  labor  strikes  of  July,  1877,  causing  in¬ 
creased  cost  and  loss  of  traffic  during  unusual  depression  in  trade  and 
finance. 

The  expenses  for  the  fiscal  year  1877  compare  as  follows: — 


Gross 

expenses. 

Per 

cent. 

Cost  per  ton  I 
per  mile. 

Per 

cent. 

Cost  per  pas¬ 
senger  per 
mile. 

Per 

cent. 

Less  than  1874 . 

$2,663,898 

1,779,291 

1,331,362 

19 

of  a  cent. 

-r27wv  of  a  cent. 

17 

lTihr  cents, 
of  a  cent. 

of  a  cent. 

41 

Less  than  1875 . 

14 

21 

25 

Less  than  1876 . 

11 

of  a  cent. 

15 

21 

These  reductions  were  made,  notwithstanding  our  increased  tonnage  of 
1877  at  reduced  rates. 

The  expenses  of  1875  and  1876  were  greater  than  they  would  otherwise 
have  been  by  the  need,  no  longer  avoidable,  to  make  good  the  deprecia¬ 
tion  and  lack  of  improvement  of  the  years  1873  and  1874,  which  had 
been  postponed  in  anticipation  of  means  to  change  the  gauge.  For  this 
reason  there  was  expended  for  new  equipment  in  1875,  $124,894.14,  and 
in  1876,  $580,671.54,  all  of  which  was  charged  to  working  expenses. 

\  (40) 


41 


2.  During  the  same  period  the  following  statement  of  th§-  reduction  in 
gross  expenditures  is  in  like  manner  taken  from  the  said  annual  reports 
of  the  four  trunk  lines: — 


N.  Y.  Central. 

Pennsylvania, 

proper. 

Balt,  and  Ohio. 

Erie. 

1876 . 

1877..’' . 

Decrease.... 

$16,124,172  34 
14,946,161  87 

$12,452,689  23 
10,751,138  64 

$5,411,635  53 
4,605,151  87 

$12,231,201  78 
10,899,839  60 

$1,178,010  47 

$1,701,550  59 

$806,483  66 

$1,331,362  18 

The  operating  expenses  of  the  Pennsylvania  Railroad  for  1876  were  in¬ 
creased  by  and  for  its  Centennial  business,  and  many  of  its  improve¬ 
ments  were  equally  valuable  in  1877,  otherwise  its  reduction  would  not 
have  been  so  great. 

3.  June  1st,  1875,  the  arrearages  of  wages  and  supply  bills  was 
$2,749,512.87,  which  required  us  to  pay  more  for  labor  and  material  to 
compensate  therefor.  Wages  are  now  paid  promptly  as  due,  and  have 
been  to  an  important  extent  reduced,  and  as  we  now  ask  no  better  credit 
terms  than  other  companies,  we  buy  supplies  as  cheap. 

4.  The  gross  tonnage  of  this  railway  has  been  as  follows:  Fiscal  year 
ending  September  30th,  1874,  total  tons,  6,364,276;  fiscal  year  ending  Sep¬ 
tember  30th,  1877,  total  tons,  6,182,451. 

The  tonnage  of  1877  was  handled,  moved,  and  delivered,  and  the  road¬ 
way  and  equipment  as  well  maintained  as  heretofore,  with  more  than 
four  thousand  less  employes. 

A  larger  part  of  the  power,  cars,  &c.,  is  now  being  manufactured  at  the 
company’s  shops  than  has  heretofore  been  done  by  preceding  manage¬ 
ments. 

5.  During  the  period  from  September  30th,  1876,  to  the  opening  of  this 
year  there  have  been  added  41  new  locomotives,  62  new  passenger  cars, 
317  new  freight  cars,  and  10  new  baggage  and  express  cars,  the  entire 
cost  of  which  was  charged  to  repairs  to  replace  former  lack  of  main¬ 
tenance. 

Two  of  the  most  important  bridges  on  the  line  (at  Port  Jervis  and 
Portage)  were  also  permanently  rebuilt,  after  being  destroyed  in  1875, 
and  their  cost  charged  to  renewals.  Each  of  these  disasters  decreased 
our  traffic  and  increased  its  cost  of  movement  in  that  year. 

6.  Notwithstanding  the  onerous  leases  of  various  branches,  the  annual 
losses  they  have  caused  have  been  reduced  in  the  following  amounts: — 


Reduction 
of  loss. 

1875  below  1874 . . . . $146,449  50 

1876  above  1875  (caused  by  changes  in  the  system  of  accounts) .  135,815  31 

1877  below  1876 .  15,897  28 

1877  below  1874 .  26,531  47 


7.  The  purchase  of  controlling  shares  in  the  Suspension  Bridge  and 
Erie  Junction  railroads  reduced  the  annual  guarantees  thereon  from 
$105,000  to  $70,000  as  legol  interest  upon  the  sum  invested  in  the  said 
purchase,  equivalent  to  an  annual  saving  of  $35,000. 


42 


8.  The  former  lease  of  the  Hackensack  Railroad,  which  caused  a  loss  of 
$40,368.37  in  1874,  has  been  changed  to  a  contract,  under  which  no  loss 
is  incurred,  but  profitable  local  rates  are  paid  this  company  to  and  from 
our  junctions. 

9.  Modifications  of  the  former  contracts  with  the  Jefferson  Car  Com¬ 
pany  have  resulted  in  an  annual  saving  of  $105,000  above  the  legal 
interest  upon  the  payments  to  secure  that  result. 

10.  The  entire  ownership,  direction,  and  control  of  the  Union  Steam¬ 
boat  Company  has  been  obtained,  by  which  a  traffic  beyond  the  influence 
or  control  of  rival  interests,  and  larger  than  the  like  traffic  delivered  to  us 
by  any  and  all  of  our  all-rail  connections,  has  been  permanently  secured. 
That  company  now  owns  seventeen  steamers,  of  an  aggregate  capacity  of 
18,500  tons,  and  two  sail  'vessels,  carrying  60,000  bushels  each.  Five 
steamers  have  been  built  under  this  management,  aggregating  8,000  tons’ 
the  whole  now  constituting  the  largest  and  best-conditioned  fleet  of  ves¬ 
sels  on  the  lakes.  The  Union  Steamboat  Company  farther  furnished  its 
credit  during  1877,  to  place  in  the  service  of  this  railway  300  cars  much 
needed  for  the  carriage  of  grain.  The  control  of  the  steamboat  company 
has  likewise  enabled  us  to  complete,  for  the  year  1878,  a  contract  for  a 
division  of  the  large  traffic  of  Lake  Superior  ports,  not  possessed  by  this 
railway  since  1872. 

11.  The  Lehigh  Valley  third-rail  contract  increased  the  traffic  of  the 
Erie  for  the  nineteen  months  since  it  was  opened,  to  December  31st,  1877, 
as  compared  with  the  same  period  prior  thereto,  242,577  tons  of  coal; 
156,666  tons  of  general  freights,  and  111,522  passengers,  beside  accom¬ 
plishing  the  proportionate  payment  for  the  rail  mainly  from  this  in¬ 
crease.  It  narrow-gauged  nearly  one-half  the  Buffalo  and  Niagara  line, 
secured  a  guaranteed  increased  coal  tonnage  for  a  term  of  years,  and 
will  establish  narrow-gauge  New  England  connections,  and  tide-water 
terminal  facilities  at  Boston  that  could  not  otherwise  have  been  secured. 

12.  The  local  inter-state  competition  of  the  New  York  Central  Railroad 
with  the  Erie  Railway  was  harmonized  by  contract,  which  took  effect 
August  1st,  1877,  and  which  has  secured  improved  results  to  both  interests. 

13.  Your  administration  was  largely  instrumental  in  securing  the  west¬ 
bound  division  of  tonnage  taking  effect  July  1st,  1877,  under  which  the 
joint-commissioner  certifies  a  gain  to  this  estate  of  $642,015.24  for  the 
nine  months  ending  March  31st,  1878,  for  a  smaller  traffic  than  that 
transported  in  the  same  period  of  the  next  prior  year. 

14.  The  same  spirit  of  harmony  has  secured  arrangements  by  which 
the  hog  and  cattle  shipments  over  this  railway  have  increased  9,853  cars 
in  two  years  over  the  corresponding  period  prior  to  said  arrangement, 
and  the  oil  shipments  have  increased  2,103,160  barrels  during  the  period 
from  June  1st,  1875,  to  January  1st,  1878,  as  compared  with  the  same 
period  next  preceding,  at  rates  now  restored  to  as  high  a  standard  as 
paid  any  trunk  line  at  any  prior  time  of  your  administration. 

15.  The  property  of  the  National  Stock  Yards  has  been  acquired, 
covering  valuable  real  estate  and  franchises  at  Buffalo,  Deposit,  and  82£ 


43 


acres  of  valuable  land  on  tide  at  Jersey  City,  with  improvements,  all 
valued  at  $1,000,000,  the  same  having  then  been  leased  to  J.  R.  McPher¬ 
son,  who  is  guaranteed  by  other  responsible  persons,  by  which  this  com¬ 
pany  now  receives  $65,000  annually,  in  lieu  of  a  deficit  to  this  company, 
during  the  year  prior  to  the  lease,  of  $7,054.75.  The  same  contracts 
farther  secure  to  us,  in  important  contingencies,  our  share  of  the  trans¬ 
portation  of  live  stock. 

16.  The  westward  contract  with  the  Pennsylvania  Coal  Company, 
secures  not  only  its  entire  competitive  coal  traffic,  but  400  new  and  much- 
needed  coal  cars,  with  a  capacity  of  fifteen  tons  each;  the  said  cars  to 
become  the  property  of  this  company  upon  ordinary  mileage  payments 
on  the  coal  actually  transported  in  them,  until  their  cost  is  paid. 

17.  The  contract  of  November  1st,  1876,  with  the  Tioga  Railroad  and 
Blossburg  Coal  companies  secured  the  exclusive  co-operation  and  tonnage 
of  those  companies,  and  the  price  charged  this  company  for  fuel  was 
reduced  35  cents  per  ton,  equal  to  $39,000  per  annum,  and  a  guaranty  to 
purchase  150,000  tons  per  annum  was  waived. 

18.  There  is  now  in  progress  a  revision  of  the  former  and  present 
sleeping  car  accounts  with  this  railway,  which  promises  valuable  results. 

19.  Prior  arrangements  were  annulled  and  remaining  rates  with  the 
New  Jersey  Lighterage  Company  reduced,  resulting  in  gains,  as  compared 
with  the. former  methods  of  performing  the  like  service,  aggregating 
about  $58,000  per  annum  on  westward  and  eastward  freights,  by  reducing 
the  rates  and  by  performing  that  service  by  the  company’s  employes. 

20.  As  compared  with  former  contract  methods,  including  grain  and 
the  freight  handled  by  the  lighterage  company,  the  cost  of  the  handling 
and  lighterage  at  and  about  New  York  and  Jersey  City,  has  been  re¬ 
duced  from  an  average  of  58  cents  per  ton  in  1873,  to  an  average  of 
34t8s  cents  per  ton  in  1877,  equal  to  a  saving  of  $440,274.91  on  the  ton¬ 
nage  handled  in  1877,  as  compared  with  the  total  at  the  cost  under  the 
contract  system  of  1873. 

21.  A  consolidation  of  the  Commercial  Fast  Freight  Line,  the  Diamond 
Fast  Freight  Line,  the  Erie  and  Milwaukee  Fast  Freight  Line,  and  the 
North  Shore  Transit  Company,  was  accomplished  December  1st,  1876, 
into  one  new  co-operative  line,  called  the  Erie  and  North  Shore  Despatch 
(consolidated),  effecting  a  saving  to  this  estate  of  $33,790.25  for  its  first 
year  upon  a  larger  business. 

All  private  interests  in  the  Erie  and  Pacific  Dispatch  were  eliminated 
May  1st,  1875,  and  the  interests  were  consolidated  with  the  Great  Western 
Dispatch  Fast  Freight  Line,  and  by  that  and  other  changes  in  the  ad¬ 
ministration  of  the  Great  Western  Dispatch,  economies  amounting  to 
$236,638.97  were  effected  for  the  thirty-one  months  including  Decem¬ 
ber  31st,  1877,  compared  with  the  same  period  next  prior  thereto. 

22.  An  adjustment  of  former  questions  at  issue  with  the  United  States 
Express  Company  and  the  present  contract  secured  to  this  company 
five  thousand  of  its  fully  paid-up  shares,  of  the  present  market  value  of 
$250,000. 


44 


23.  The  participation  and  payment  by  western  and  other  connections 
has  been  secured  for  their  due  proportions  of  the  expensive  New  York 
harbor  deliveries  at  irregular  points,  formerly  borne  solely  by  this  rail¬ 
way,  by  which  the  earnings  of  this  railway  were  increased  $241,260.73 
during  the  two  years  ending  December  31st,  1877,  compared  with  former 
divisions  on  the  same  traffic.  The  co-operation  of  connecting  and  rival 
companies  was  also  secured  in  sharing  the  yardage  on  hogs  at  New  York 
in  the  manner  stated,  by  which  this  company  saved  $26,000  during  its 
last  fiscal  year  as  compared  with  prior  methods. 

24.  The  adjustment  of  the  grading  of  grain  in  New  York  harbor,  which 
your  administration  largely  aided,  has  resulted  in  gains  of  traffic  to  this 
port  and  its  carriers,  and  equalizes,  as  far  as  practicable,  the  disparities 
of  terminal  facilities  for  grain  at  New  York  under  which  we  labor. 

25.  The  long  pending  and  vexatious  traffic  differences  between  this 
company  and  the  Atlantic  and  Great  Western  Railroad  Company  were 
adjusted  to  the  satisfaction  of  the  latter  management  in  April,  1876,  as 
per  copy  of  its  assurance  to  that  effect  in  the  Appendix  hereto  (marked 
E),  which  adjustment  continues  in  effect  at  this  date. 

26.  Valuable  through  passenger  connections  have  been  established 
between  New  York  and  Chicago,  via  the  Pittsburgh,  Fort  Wayne  and 
Chicago  Railway,  and  equally  important  freight  connections  with  the 
leased  lines  of  the  Pennsylvania  Railroad,  via  Urbana,  to  and  from 
Chicago,  Indianapolis,  St.  Louis,  and  elsewhere,  to  the  equal  gain  of  the 
Atlantic  and  Great  Western  Railway.  These  connections  were  largely 
due  to  your  own  former  relations  to  the  Pennsylvania  Company. 

27.  The  reductions  in  our  rates  of  wages  which  took  effect  July  1st, 
1877,  in  which  month  the  almost  national  labor  difficulties  occurred, 
have  resulted  in  an  average  monthly  saving  of  $55,000. 

28.  In  addition  to  these  gains  in  items  readily  specified,  wejbelieve  the 
discipline  of  employes  is  improved,  more  rigid  systems  of  accountability 
are  enforced,  and  the  line  service  is  more  harmonious,  and  that  these 
results  have  been  accomplished,  particularly  during  the  past  year,  not¬ 
withstanding  the  efforts  of  opposing  parties  to  create  disaffection. 

We  have  endeavored  to  state  fairly  within  our  departments  the  un¬ 
avoidable  and  avoidable  disadvantages  of  this  railway,  and  what  has  been 
done  in  part  during  your  administration  to  remove  the  latter. 

The  unavoidable  may  be  stated  as: — 

A.  Our  geographical  location  upon  longer  average  distances,  pre¬ 
cluding  earnings  per  mile  upon  like  through  tonnage  equal  to  our  rivals. 
This  includes  our  relative  disadvantage  for  traffic  to  and  from  Baltimore, 
Philadelphia,  and  New  England. 

B.  The  disparity  in  control  of  connections. 

C.  Rivalries  with  the  state  canals  and  railways. 

D.  (Contingently)  our  gradients  and  curvatures. 

The  disparities  noted  as  unavoidable  may  be  modified  in  the  following- 
particulars: — 


45 


A.  Some  of  our  gradients  and  curvatures  may  be  reduced  by  ade¬ 
quate  outlay. 

B.  Our  disparities  in  New  England  distance  via  New  York,  as  com¬ 
pared  with  the  Central,  may  be  reduced  from  an  average  of  150  miles  to 
40  miles,  by  the  completion  of  the  Hoosac  Line,  and  somewhat  reduced 
by  the  completion  of  the  New  York  and  New  England  Line  via  Newburgh. 

The  avoidable  may  be  summarized  as: — 

A.  Our  exceptionally  expensive  gauge  to  operate. 

B.  The  losses  of  traffic  it  involves  by  transfers  and  inability  to  utilize 
connections. 

C.  Our  iron  rails  and  single  track. 

D.  Inadequate  shops,  terminal  facilities,  equipment,  and  stations. 

E.  The  changes  and  uncertainties  of  management  and  policy;  and, 

F.  The  reductions  of  rates  we  have  sought  to  avoid  and  shorten, 
rather  than  cause  and  prolong. 

Both  these  unavoidable  and  avoidable  defects  have  continued  in  joint 
effect  to  this  date;  otherwise  the  economies  stated  and  the  reorgani¬ 
zation  of  the  service  would  have  indicated  more  favorable  results  in  the 
annual  exhibits.  The  avoidable  disadvantages  have  clearly  had  a  greater 
influence  upnn  results  than  the  unavoidable — for  which  reason  we  under¬ 
stand  the  leading  purpose  of  the  reorganization  to  be  to  cancel  them  by 
narrow-gauging  the  line,  completing  its  second  track  and  steel  rail,  and 
providing  the  needed  facilities  of  all  kinds  to  establish  a  parity  with  rival 
routes,  and  closer  relations  with  connecting  lines. 

These  will  be  reinforced  by  certain  local  advantages  which  have  not 
been  stated;  such  as  our  milk  and  oil  trades,  our  coal  traffic,  the  cheap 
fuel,  &c.,  as  well  as  from  a  large  and,  to  us,  entirely  new  New 
England  all-rail  traffic  via  Binghamton,  upon  the  level  portion  of  our 
line,  which  avoids  the  expensive  grades  and  curves  of  the  Delaware  and 
Eastern  divisions;  improved  connections  'to  and  from  Lake  Ontario  via 
Fairhaven;  new  sources  of  tonnage  in  a  connection  with  the  Central 
Railroad  of  New  Jersey,  via  Carbondale,  and  with  the  New  York  Midand, 
at  Middletown;  the  probability  of  an  Albany,  Troy,  Saratoga  and  Mon¬ 
treal  route  to  and  from  New  York,  upon  the  west  shore  of  the  Hudson, 
in  connection  with  our  line,  and  other  improved  results  from  local  causes. 

If  these  be  farther  supplemented  by  the  ability,  through  foreclosure,  to 
justly  modify  onerous  obligations;  if  the  return  to  specie  payments 
restores  national  prosperity,  and  gives  low,  fixed  values  to  labor  and  ma¬ 
terial;  if  diligent  and  upright  management  be  secured  and  continued  to 
avail  of  them,  and  if  rates  be  harmoniously  maintained,  as  a  common 
interest  now  requires,  we  believe  this  railway  will  permanently  accom¬ 
plish  much  better  results  for  its  proprietors  than  heretofore. 

Respectfully  submitted. 

G.  R.  Blanchard,  Assistant  to  the  Receiver. 

E.  S.  Bowen,  General  Superintendent. 

Stephen  Little,  Auditor. 

New  York,  April  20th,  1878. 


APPENDIX 


A  (see  page  20). 


COMPARATIVE  STATEMENT  OF  WAGES  PAID  IN  APRIL,  1877,  IN  MAINTENANCE  OF  WAY 
BY  SUNDRY  RAILROADS. 


Occupation. 

Erie 

Railway. 

N.  Y.  Cent, 
and 

Hudson  Riv. 

Pennsylvania. 

Baltimore 

and 

Ohio. 

Road  supervisors . 

Per  month. 
$70  @$90 

Per  month. 

$70  00 

Per  month. 
$80  @$90 

Per  month 

None. 

Track  foremen . 

45  @  65 

42  00 

45  @  65 

$36  00 

Assistant  track  foremen . 

40  @  50 

40  00 

35 

None. 

Bridge  flagmen . 

40  @  50 

30  00 

32  @  45 

30  00 

Watchmen  and  flagmen . 

Per  day. 

$1  25  ‘ 

Per  day. 

$1  00 

32  @  41 

Per  day. 
$1  05 

Track  laborers . 

1  25 

1  00 

Per  day. 

$1  00 

1  05 

Yard  track  laborers . 

1  35 

1  00 

1  25 

1  10 

Erie  Railway  prices  are  now  reduced  10  per  cent,  from  above. 


B  (see  page  32). 

NEW  YORK  SUPREME  COURT. 

CHARLES  POTTER  AND  OTHERS  AGAINST  HUGH  J.  JEWETT  AND  OTHERS. 

City  and  County  of  New  York,  ss.: — 

J.  B.  Gaddis,  being  duly  sworn,  deposes  and  says,  that  be  is  at  this  time  and  has 
been  for  about  five  years,  or  prior  to  and  for  the  entire  period  of  the  connection  of 
Hugh  J.  Jewett  with  the  Erie  Railway  both  as  president  and  receiver,  the  president 
and  general  manager  of  the  New  Jersey  Lighterage  Company,  and  that  in  said 
capacities  no  payments  are  made  without  the  authority  of  this  deponent. 

That  he  has  read  the  complaint  in  the  case  of  Charles  Potter  and  others  against 
the  said  Hugh  J.  Jewett,  receiver  of  the  Erie  Railway,  sworn  to  on  the  18th  Jan¬ 
uary,  1878,  and  particularly  as  to  the  following  charge: — 

“  That  the  said  Jewett  has  made  extravagant  and  improvident  contracts  with 
“the  New  Jersey  Lighterage  Company  and  other  carriers  for  the  transportation 
“of  such  freight  across  the  said  river,  at  rates  much  above  fair  and  reasonable 
‘ £  rates  of  compensation  and  much  above  the  rates  for  which  such  transportation 
“  could  and  should  have  been  effected,  as  said  Jewett  well  knew. 

‘  ‘  And  the  plaintiffs  charge  and  aver,  upon  information  and  belief,  that  the  said 
“Jewett  and  other  officers  of  the  Erie  Railway  Company  were,  and  are  interested 

(46) 


47 


“in  the  said  New  Jersey  Lighterage  Company,  and  are  stockholders  therein,  and 
“  were  influenced  and  induced  to  the  making  of  such  contracts  by  such  personal 
“interest,  in  fraud  of  the  said  Erie  Railway  Company  and  its  stockholders.” 

This  deponent  deposes  and  says,  that  the  charges  now  made  by  the  New  Jersey 
Lighterage  Company  to  Hugh  J.  Jewett  for  the  transfer  and  handling  of  said 
freights  are  not,  and  have  not  been,  during  the  whole  or  any  portion  of  the  said 
period,  in  excess  of  those  charged  by  the  said  New  Jersey  Lighterage  Company  to 
other  railroad  companies;  that  said  charges  are,  in  most  instances,  less  than  those 
collected  by  deponent  from  other  railroad  companies.  That  the  deponent’s  charges 
to  the  Erie  Railway  Company  are,  to  the  best  of  the  deponent’s  knowledge  and 
belief,  less  than  those  made  by  other  lightermen  or  companies  to  their  respective 
carriers.  That  since  the  said  Jewett’s  connection  with  the  Erie  Railway,  he  has 
reduced  the  allowances  by  the  said  Erie  Railway  Company  to  the  said  New  Jersey 
Lighterage  Company  from  seventy-five  cents  per  ton  upon  west-bound  freights  to 
sixty  cents  per  ton;  and,  in  addition  thereto,  the  said  Jewett  has  greatly  reduced 
the  quantities  of  business  transacted  with  this  lighterage  company.  That  the  said 
Jewett  has  also  taken  away  from  this  company,  and  now  performs  himself  the 
trjansfer  of  the  east-bound  harbor  business  from  the  said  Erie  Railway  at  Jersey 
City,  formerly  transferred  in  and  about  the  harbor  of  New  York  by  the  New 
Jersey  Lighterage  Company. 

And  deponent  further  avers  that,  at  this  time,  and  for  about  three  years  last  past, 
the  only  business  done  by  this  lighterage  company  for  the  said  Jewett  or  the  Erie 
Railway  Company  is  that  which  is  taken  by  this  company  in  small  lots  from 
vessels,  warehouses,  &c.,  remote  from  the  stations  of  the  Erie  Railway  to  Jersey 
City,  where  the  said  Jewett  or  the  Erie  Railway  Company  has  not  the  requisite 
barges  or  those  of  the  proper  sizes  or  capacities  therefor. 

Your  deponent  further  avers  that  since  the  said  Jewett’s  connection  with  the 
Erie  Railway  no  officer  or  agent  has,  or  has  had,  any  direct  or  indirect  interest  in 
or  been  allowed  any  commission  or  rebate  whatever  upon  any  of  the  business 
transacted  with  the  Erie  Railway,  or  the  said  Jewett  as  receiver. 

Your  deponent  further  avers  that  neither  the  said  Jewett  nor  any  of  the  officers 
of  the  Erie  Railway  Company  have  been,  or  are,  interested  in  the  said  New  Jersey 
Lighterage  Company  since  the  connection  of  the  said  Jewett  with  the  said  railway, 
nor  are  they  stockholders  therein,  excepting  twenty-five  shares  purchased  by  E.  T. 
Hopkins  prior  to  the  said  Jewett’s  connection  with  the  said  railway.  That  said 
Hopkins  is  connected  with  the  said  Erie  Railway  as  a  subordinate  agent,  and  the 
said  Hopkins  purchased  and  holds  the  same  as  an  investment,  which  has  so  far 
proved  to  his  loss. 

That  the  dividends  upon  the  said  stock  have  been  for  the  past  three  years  two 
per  cent,  in  1875,  three  and  one-half  per  cent,  in  1876,  and  three  and  one-half  per 
cent,  in  1877,  the  total  payments,  therefore,  to  the  said  Hopkins  being  in  the 
aggregate  not  more  than  $225.  That  no  contracts  or  payments  are  made  or  author¬ 
ized,  or  moneys  paid  or  orders  given  this  deponent  by  the  said  Hopkins,  except  on 
instructions  from  his  superior  officers.  That  no  contracts  whatever  have  been 
v  made  by  the  said  Jewett  or  any  of  his  officers  with  deponent  or  the  sJ«l  lighterage 
company,  excepting  such  verbal  arrangements  as  are  made  from  time  to  time  for 
the  necessary  prosecution  of  the  business  between  these  parties;  and  further  your 
deponent  saith  not. 

(Signed)  J.  B.  Gaddis. 

Sworn  to  before  me  this  11th  day  of  February,  A.  D.  1878. 

(Signed)  Edson  D.  Hammond  (43),  Notary  Public,  New  York  county. 


48 


C  (see  pages  33  and  34). 

ERIE  AND  NORTH  SHORE  DESPATCH  CONSOLIDATED. 

Agreement  made  between  The  Erie  Railway  Company,  by  Hugh  J.  Jewett,  its 
receiver,  The  Great  Western  Railway  Company  of  Canada,  The  Grand  Trunk 
Railway  Company,  The  Canada  Southern  Railway  Company,  The  Michigan 
Central  Railroad  Company,  The  Detroit  and  Milwaukee  Railway  Company,  by 
C.  C.  Trowbridge,  its  receiver,  The  Toledo,  Wabash  and  Western  Railway  Com¬ 
pany,  by  J.  D.  Cox,  its  receiver,  as  follows: — 

Whereas,  There  are  now  in  existence  four  several  fast  freight  lines  running  over 
the  Erie  Railway  east  of  the  Niagara  river  and  west  of  said  river  by  way  of  the 
several  railroads,  parties  hereto,  as  follows,  respectively: — 

First. — The  Erie  and  Milwaukee  line,  so  called,  by  way  of  the  Great  Western 
and  Detroit  and  Milwaukee  railways,  to  and  from  Milwaukee,  Wisconsin,  and 
other  common  points. 

Second. — The  Commercial  Express,  so  called,  by  way  of  the  Grand  Trunk  and 
Michigan  Central  Railways,  to  and  from  Chicago,  and  other  common  points. 

Third. — The  Erie  and  North  Shore  Transit  Company,  so  called,  by  way  of  the 
Great  Western  Railway  of  Canada  and  Michigan  Central  Railway,  to  and  from 
Chicago,  and  other  common  points. 

Fourth. — The  Diamond  Line,  so  called,  by  way  of  the  Canada  Southern,  Michi¬ 
gan  Central,  and  Toledo,  Wabash  and  Western  railways,  to  and  from  common 
western  points. 

And  Whereas,  for  the  purpose  of  reducing  expenses  and  maintaining  rates,  it  is 
for  the  interest  of  all  the  railroad  companies,  parties  hereto,  that  the  said  several 
fast  freight  lines  should  be  merged  into  one  line,  on  such  terms  as  shall  secure  to 
said  railroad  companies,  parties  as  aforesaid,  their  herein  agreed  division  of  ton¬ 
nage  revenue  and  expenses  hereunder: — 

Now,  therefore,  this  agreement  witnesses  as  follows: — 

1st.  On  the  1st  day  of  December,  1876,  the  four  lines  aforesaid  shall  be  consoli¬ 
dated  into  one  line,  to  be  known  and  designated  as  the  “Erie  and  North  Shore 
Despatch  Consolidated,”  and  shall  be  operated  as  a  fast  freight  line,  in  manner 
following,  viz.: — 

East  of  the  Niagara  river,  by  way  of  the  Erie  Railway  and  its  connections. 
Between  the  Niagara  river  and  the  Detroit  and  St.  Clair  rivers,  by  way  of  the 
Canada  Southern,  the  Grand  Trunk,  and  Great  Western  Railways  of  Canada. 

West  of  said  Detroit  and  St.  Clair  rivers,  by  way  of  the  Toledo,  Wabash  and 
Western,  the  Michigan  Central,  and  the  Detroit  and  Milwaukee  railways. 

The  business  of  said  consolidated  line  shall  include  the  transportation  of  all 
through  traffic  between  competing  points  on  line  way-bills  passing  over  the  roads 
of  the  companies,  parties  hereto;  excepting,  however,  all  coal  west-bound,  and 
live  stock  east-bound,  and  traffic  from  and  to  the  Chicago  and  Lake  Huron  rail¬ 
road  via  Port  Huron,  billed  through. 

2d.  The  general  management  of  the  consolidated  line  shall  be  vested  in  a  board 
of  managers,  which  shall  be  composed  of  one  representative  from  each  railway 
company,  party  hereto,  and  in  such  board  each  manager  shall  have  one  vote. 

3d.  The  said  board  shall  appoint  a  general  manager  of  the  line,  and  such  other 
officers  and  agents  as  may  be  necessary.  They  shall  define  the  duties  of  general 
manager,  officers,  and  agents,  and  fix  their  compensation.  They  shall  have  gen¬ 
eral  supervision  of  the  business  of  the  consolidated  line,  prescribe  the  manner  of 
keeping  its  accounts,  and  make  all  necessary  rules  and  regulations  for  transaction 
of  its  business. 


49 


4th.  The  board  shall  meet  in  Detroit  on  the  second  Wednesday  of  January, 
April,  July,  and  October  in  each  year,  and  records  shall  be  kept  of  all  the  pro¬ 
ceedings  of  such  meetings,  and  copies  supplied  to  each  company,  party  hereto. 
Two  members  of  the  board  may  call  a  special  meeting  at  any  time,  by  giving  to 
each  member  thereof  two  weeks’  notice  in  writing,  specifying  the  time,  place,  and 
objects  of  the  meeting  desired. 

5th.  The  general  manager,  appointed  as  aforesaid,  shall  keep  accurate  accounts 
of  the  joint  earnings,  expenses,  losses,  damages,  and  overcharges  of  the  consoli¬ 
dated  line,  and  shall  apportion  monthly  amongst  the  several  companies,  parties 
hereto,  all  joint  expenses,  losses,  damages,  and  overcharges,  in  accordance  with 
the  divisions  herein  provided,  or  as  the  same  may  be  from  time  to  time  otherwise 
agreed  upon  by  said  board.  He  shall  submit  such  accounts  for  approval  at  the 
regular  meetings  of  the  general  freight  agents,  or  other  officers  of  the  several  com¬ 
panies,  parties  hereto,  as  may  be  delegated  to  act  in  the  premises;  and  when  the 
same  shall  have  been  approved,  the  said  several  companies,  parties  hereto,  shall 
be  charged  with  the  respective  amounts  therein  found  due  from  them,  and  the 
same  shall  be  paid  accordingly. 

There  shall  be  placed  in  the  hands  of  the  general  manager,  for  the  purpose  of 
payment  of  expenses,  losses,  damages,  and  overcharges,  when  approved  as  afore¬ 
said,  a  line  fund,  to  which  each  of  the  companies  hereto  shall  contribute  in  pro¬ 
portion  to  the  number  of  cars  herein  provided  to  be  contributed  by  them  respect¬ 
ively  to  the  line  equipment;  the  amount  of  such  fund  shall  be  fixed  from  time  to 
time  by  the  board  of  managers. 

As  security  for  the  faithful  performances  of  his  duties,  and  for  the  proper  appli¬ 
cation  of  the  funds  so  placed  in  his  hands,  the  general  manager  shall  give  bond 
in  the  sum  of  twenty-five  thousand  dollars,  which  amount  may  at  any  time  be 
changed  by  the  board. 

There  shall  be  a  regular  quarterly  audit  of  the  accounts  of  such  general  mana¬ 
ger  by  an  auditor  or  auditors,  under  the  direction  of  the  board,  and  the  result 
thereof  shall  be  reported  to  each  company,  party  hereto. 

6th.  The  companies,  parties  hereto,  agree  that  within  six  months  from  and  after 
the  first  of  December,  1876,  they  will  furnish  suitable  cars,  properly  marked  and 
numbered,  for  exclusive  use  in  the  transportation  of  the  traffic  of  the  consolidated 
line,  and  to  such  equipments  they  will  respectively  contribute  as  follows: — 


Cars. 

The  Erie  Railway  Company . 1,641 

The  Great  Western  Railway  Company .  470 

The  Grand  Trunk  Railway  Company .  325 

The  Michigan  Central  Railway  Company . .  937 

The  Toledo,  Wabash,  and  Western  Railway  Company . 

*The  Detroit  and  Milwaukee  Railway  Company . 

The  Canada  Southern  Railway  Company .  .  325 


And  that  until  the  expiration  of  the  period  so  limited,  and  thereafter,  from  time 
to  time,  as  required  by  the  board  of  managers,  they  will  each  contribute  such  of 
their  common  cars,  respectively,  as  may  be  necessary  for  the  prompt  and  proper 
carriage  of  the  traffic  of  the  consolidated  line. 

7th.  At  any  time  after  the  entire  equipment  of  the  consolidated  line  shall  have 
been  furnished,  as  above  provided,  the  board  of  managers,  by  a  two-thirds  vote  of 
their  whole  number,  may  increase  such  equipment  from  time  to  time  as  the  busi- 

*  in  the  original  contract  there  are  273  cars  apportioned  to  the  Detroit  and  Milwaukee 
Railway  Company;  but  until  it  is  definitely  decided  the  amount  is  left  blank. 


50 


ness  requires,  in  such  ways  and  by  such  means  and  under  such  apportionment  as 
they  shall  deem  expedient.  It  is  expressly  understood  that  no  company,  party 
hereto,  may  reduce  its  quota  of  cars,  except  by  and  with  the  consent  of  two-thirds 
of  the  managers  thereto  had  and  obtained  at  a  regular  meeting  of  the  board. 

8th.  In  the  exchange  of  cars  between  the  companies,  parties  hereto,  for  the 
purpose  of  the  business  of  said  line,  the  existing  rules  and  regulations  of  the 
master  car-builders  (copy,  whereof  is  hereto  attached  and  made  a  part  of  this 
agreement)  shall  govern  and  control  in  all  questions  touching  losses,  damages, 
and  repairs  to  such  cars,  except  so  far  as  said  rules  may  from  time  to  time  be 
modified  by  the  board. 

9th.  The  cars  of  the  consolidated  line  while  moving  upon  the  several  roads  of 
the  companies,  parties  hereto,  shall  be  under  the  direction  and  control  of  the 
respective  superintendents  thereof. 

10th.  Each  company,  party  to  this  agreement,  shall  keep  and  transmit  to  each 
other  of  the  companies,  parties  hereto,  accurate  statements  of  the  mileage  of  all 
cars  of  the  consolidated  line,  and  other  cars  carrying  line  traffic  passing  over  its 
road,  and  settlements  of  mileage  accounts  between  said  companies  shall  be  made 
in  the  manner  usual  and  customary  between  connecting  railways. 

11th.  The  cars  now  used  by  the  several  fast  freight  lines  hereby  consolidated 
shall  be  run  over  and  by  their  respective  routes  as  at  present,  and  shall  so  con¬ 
tinue,  for  the  purposes  of  exchange,  with  their  present  marks  and  designations, 
until  it  shall  be  otherwise  agreed  by  and  between  the  parties  to  this  agreement. 

12th.  The  line  cars  shall  be  used  exclusively  in  the  business  of  the  consolidated 
line;  provided,  however,  that  in  the  event  of  any  such  cars  being  dispatched 
empty,  any  of  the  parties  hereto  may  load  such  cars  with  freight  destined  to  or 
beyond  the  terminus  of  its  road  and  in  the  direction  in  which  such  empty  cars 
are  moving;  but  in  no  event  shall  line  cars  be  used  for  traffic  between  way-station 
and  way -station  on  the  same  road. 

13th.  The  railway  companies,  parties  hereto,  respectively  agree  to  give  the  con¬ 
solidated  line  as  good  through  rates,  time,  dispatch,  and  facilities  of  every  kind, 
as  they  have  heretofore  severally  given  to  the  respective  freight  lines  hereby  con¬ 
solidated,  and  further  agree  to  place  the  consolidated  line  upon  as  good  a  footing 
in  every  respect  for  all  traffic  as  the  most  favored  line  operating  over  their  road 
by  way  of  any  other  routes  or  railways. 

14th.  The  several  parties  hereto  agree  to  be  and  become  responsible  for  all  dam¬ 
age  to  or  loss  of  property  happening  while  upon  their  respective  roads,  or  in  their 
respective  possession,  for  which  they  are  responsible  as  common  carriers,  and,  in 
the  event  that  such  loss  or  damage  cannot  be  definitely  located,  the  same  shall  be 
divided  between  the  companies  over  whose  roads  said  property  was  carried,  in 
the  proportion  of  their  respective  earnings  from  the  transportation  thereof. 

15th.  Rates  by  the  consolidated  line,  both  east  and  west,  shall  at  all  times  be 
as  high  as  those  of  other  competing  routes  or  lines.  Through  rates,  west-bound, 
from  common  points  of  shipment  to  destinations,  shall  be  made  exclusively  by 
the  Erie  Railway  Company;  and  through  rates  east-bound,  from  common  points 
of  shipment  to  destination,  shall  be  made  by  the  western  company  with  whom 
such  shipment  originates. 

16th.  The  Great  Western  Railway  of  Canada,  the  Grand  Trunk  Railway  Com¬ 
pany,  and  the  Canada  Southern  Railway  Company  hereby  agree  that  the  aggregate 
of  all  the  tonnage  passing  over  their  respective  roads,  between  the  Erie  Railway 
and  points  on  and  west  of  the  west  bank  of  the  Detroit  and  St.  Clair  rivers 
excepting ,  however ,  coal  west-bound,  live  stock  east-bound,  and  traffic  from  and  to 


51 


the  Chicago  and  Lake  Huron  Railroad  via  Port  Huroh,  as  aforesaid;  ahd  the 
revenues  derived  therefrom  shall  be  divided,  as  nearly  as  may  be,  between  them 
in  the  following  proportions,  viz.: — 

To  the  Great  Western  Railway  of  Canada,  fifty  (50)  per  centum  thereof. 

To  the  Grand  Trunk  Railway  Company  twenty  (20)  per  centum  thereof. 

To  the  Canada  Southern  Railway  Company  thirty  (30)  per  centum  thereof. 

And  to  the  end  of  accomplishing  such  agreed  division  on  west-bound  traffic, 
the  Erie  Railway  Company  agrees  to  distribute  amongst  said  Canadian  roads  the 
west-bound  tonnage  of  the  consolidated  line,  together  with  all  other  tonnage 
from  its  own  road,  destined  by  way  of  said  Canada  roads  to  points  on  or  west  of 
the  west  bank  of  the  Detroit  and  St.  Clair  Rivers,  in  the  proportions  above  pro¬ 
vided,  and  in  such  way  that  the  revenue  derived  therefrom  shall  be  received  in 
the  like  proportions. 

And  to  the  end  of  accomplishing  such  agreed  division  in  east-bound  traffic,  the 
Michigan  Central  Railway  Company  agrees  to  distribute  the  aggregate  of  the  east- 
bound  tonnage  of  the  consolidated  line,  together  with  the  local  traffic  of  its  own 
road,  destined  for  transportation  over  the  Erie  Railway,  so  as  to  equalize  the  fore¬ 
going  agreed  percentages  of  the  Canadian  lines— both  in  respect  of  the  amount  of 
tonnage  and  the  revenue  to  be  derived  therefrom. 

And  to  enable  said  Michigan  Central  company  so  to  do,  it  shall  receive  weekly 
from  the  general  manager  of  the  consolidated  line  a  statement  of  the  east-bound 
tonnages  of  said  line,  and  from  the  Erie  Railway  Company  a  statement  of  all 
other  tonnages  received  for  transportation  over  its  road,  via  said  Canadian  lines, 
from  points  hereinbefore  specified.  Such  statements  shall  also  show  the  propor¬ 
tions  of  said  tonnages  carried,  and  the  revenue  derived  therefrom  by  the  said 
Canadian  lines  respectively;  and  in  all  cases  the  dates  of  the  way  bills  shall 
govern. 

Monthly  exhibits  of  the  tonnages  and  revenues  so  equalized  shall  be  furnished 
to  each  other  by  the  parties  hereto,  and  each  will  afford  the  other  prompt  and  full 
opportunities  for  verifying  the  same  whenever  desired. 

17th.  The  Canada  Southern  Railway  Company  hereby  agrees,  that  during  the 
continuance  of  this  agreement  it  will  contribute  to  the  business  of  the  consolidated 
line  the  same  proportion  of  east-bound  traffic,  from  or  through  Toledo,  that 
contributed  to  the  Erie  Railway,  via  Diamond  line  and  otherwise,  during  the 
year  ending  September  1st,  1876. 

18th.  It  is  hereby  agreed  between  the  Michigan  Central  Railroad  Company  and 
the  Detroit  and  Milwaukee  Railway  Company,  the  other  parties  hereto  concurring, 
that  the  latter  company  is  hereby  formally  admitted  to  a  participation  in  the  con 
solidated  line,  as  formerly  in  the  Erie  and  North  Shore  Transit  Company.  And 
it  is  also  agreed  that  the  business  between  Milwaukee  and  points  upon  or  by  way 
of  the  Erie  Railway,  in  both  directions,  when  consigned,  shall  follow  the  route 
the  Michigan  Central  or  Detroit  and  Milwaukee  railways  as  designated,  and  when 
unconsigned,  shall  be  divided  between  said  two  companies  as  nearly  as  may  be  in 
equal  proportions,  having  regard  both  to  tonnage  and  to  revenue  therefrom. 

19th.  Any  railway  or  transportation  company  may  become  a  party  to  this 
agreement,  by  and  with  the  consent  of  two-thirds  of  the  managers  thereto, 
formally  had  at  any  regular  meeting  of  the  board. 

20th.  This  contract  shall  continue  until  the  1st  day  of  January,  a.  d.  1878, 
and  thereafter  shall  continue,  unless  and  until  the  same  shall  be  terminated  at  the 
option  of  some  one  of  the  companies,  parties  hereto,  by  three  months’  written 


52 


notice  of  their  intention  so  to  terminate,  given  to  each  of  said  companies  on  the 
first  day  of  January,  April,  July,  or  October,  in  any  year. 

Witness  the  hands  of  the  respective  officers  of  the  several  companies,  parties 
as  aforesaid,  to  this  end,  duly  authorized,  this  fifteenth  day  of  No¬ 
vember,  a.  d.  1876. 

The  Erie  Railway  Company, 

H.  J.  Jewett,  Receiver, 

by  G.  R.  Blanchard,  Assistant. 

For  the  Grand  Trunk  Railroad  Company, 

L.  J.  Seargeant,  Traffic  Manager. 

The  Michigan  Central  Railroad  Company, 

by  H.  B.  Ledyard,  General  Superintendent. 
The  Great  Western  Railway  of  Canada, 

F.  Boughton,  Gen’l  Manager, 

per  Jno.  Crampton,  Asst.  Gen’l  Manager. 

For  the  Canada  Southern  Railway  Company, 

W.  K.  Muir,  General  Manager. 

C.  C.  Trowbridge, 

Receiver,  Detroit  and  Milwaukee  Railway. 
Toledo,  Wabash  and  Western  Railway  Company, 

Note  A.— The  Chicago  and  Alton,  Milwaukee  and  St.  Paul,  Chicago  and  North  Western, 
and  other  companies  have  become  parties  to  this  agreement  since  its  date. 

Note  B. — The  Great  Western  Despatch  contract  is  almost  identical  with  this,  but  more  favorable 
in  that  the  Erie  company  does  not  pay  any  part  of  the  New  York  or  Boston  expenses  of  the  line 
offices,  agents,  or  clerks. 


D  (see  page  38). 

City  and  County  of  New  York ,  ss.: 

James  H.  Rutter,  being  duly  sworn,  deposes  and  says,  that  he  is  the  general 
traffic  manager  of  the  New  York  Central  and  Hudson  River  Railroad;  that  he  has 
held  the  said  position,  and  that  of  general  freight  agent,  for  over  five  years;  that, 
in  reference  to  that  portion  of  the  complaint  in  the  case  of  Charles  Potter  and 
others  against  Hugh  J.  Jewett,  the  Erie  Railway  Company  and  others,  sworn  to 
on  the  18th  of  January,  1878,  which  is  as  follows: — 

“  That  in  the  early  part  of  the  year  1876  the  said  Jewett,  as  such  receiver,  made 
“numerous  improvident  and  unprofitable  contracts  with  shippers  of  through 
“freights  over  the  Erie  Railway  Company  for  transportation  of  through  freights, 
“  for  the  period  of  one  year  from  the  respective  dates  of  such  contracts,  at  less  than 
“  the  cost  of  transportation  thereof  to  the  Erie  Railway  Company,  and  that  such 
‘  ‘  contracts  included  and  embraced  the  greater  portion  of  the  through  freight  car- 
‘  ‘  ried  by  the  said  Erie  Railway  Company  during  the  said  year. 

“And  plaintiffs  further  charge  and  aver,  upon  information  and  belief,  that  the 
“  said  contracts  were  manifestly  and  clearly  improper  and  unprofitable,  and  were 
“known  to  the  said  Jewett  so  to  be,  and  that  certain  of  the  principal  officers  of 
“the  said  Erie  Railway  Company  were  interested  therein  and  made  large  profits 
“therefrom,  and  that  said  contracts  were  carried  out  by  the  said  Jewett  to  the 
“great  loss  of  the  trust  estate  in  his  hands  as  receiver  aforesaid” — he  deposes  and 
says: — 

That  during  the  spring  and  summer  of  1876  it  became  necessary  for  the  New 
York  Central  and  Hudson  River  railroads,  in  order  to  meet  competition,  to  make 
contracts  running  for  various  periods,  but  principally  to  July  1st,  1877,  upon  com- 


53 


peting  west-bound  freights;  that  such  contracts  were  made  and  authorized  by  this 
deponent  through  the  various  agencies  of  this  company,  and  the  fast  freight  and 
despatch  lines  operating  via  its  route;  that  the  said  contracts  were  made  at  low 
prices  for  their  duration;  that  the  said  contracts  were  ordered  and  carried  out  in 
good  faith  by  the  said  New  York  Central  and  Hudson  River  Railroad  Company 
and  its  connections;  and  that  the  manner  of  making  and  fulfilling  the  said  con¬ 
tracts  precludes  the  possibility  of  a  profit  to  the  agents  in  making  and  fulfilling 
the  same;  and  deponent,  from  his  general  knowledge  of  the  freight  business,  and 
from  the  knowledge  he  possessed  at  the  time  that  similar  contracts  were  made  by 
the  Erie  Railway,  believes  it  impossible  for  agents  or  officers  of  that  road  to  have 
secured  higher  rates  than  they  obtained,  and  retain  the  freights,  or  to  have  de¬ 
rived  any  profit  or  benefit  to  themselves  personally  therefrom. 

(Signed)  J.  H.  Rutter. 

Sworn  to  before  me  this  5th  day  of  April,  1878. 

W.  J.  Vanarsdale,  Notary  Public,  (7),  New  York  county. 


E  (see  page  44). 

J.  H.  Devereux,  Receiver 
Of  the  Atlantic  and  Great  Western  Railroad, 
Cleveland,  0.,  Apjil  6,  1876. 

G.  R.  Blanchard,  Esq.,  Assistant  to  the  Receiver: — 

Dear  Sir:  In  reference  to  the  proposition  for  a  change  of  percents,  as  per  letter 
of  Mr.  Vilas,  general  freight  agent  (see  Note  1),  dated  8th  of  February,  1876,  I 
beg  to  remark: — 

After  a  full  consultation  with  Mr.  Cochran  (see  Note  2),  that  officer  will  to-day, 
as  I  understand  his  letter,  advise  Mr.  Vilas  of  the  Atlantic’s  acceptance  of  the 
percents  upon  oil  rates,  to  take  effect  the  7th  inst.;  and,  upon  other  New  York 
business,  also  accepting  the  divisions  heretofore  existing. 

In  this  final  settlement  of  a  vexed  and  much  misunderstood  matter,  I  wish  to 
thank  you  for  the  consideration  you  have  shown  and  to  express  my  sincere  appre¬ 
ciation  of  the  policy  of  the  Erie  towards  this  line  and  its  connections,  so  particu- 
ularly|manifested  by  the  results  of  this  recent  investigation,  and  so  plainly  spoken 
in  the  sentiments  of  Mr.  Vilas’  letter,  which  I  had  not  seen,  I  believe,  until  you 
furnished  me  with  a  copy.  Very  respectfully  yours, 

(Signed)  J.  H.  Devereux,  Receiver. 

Note  1.— Mr.  Vilas  is  the  general  freight  agent  of  the  Erie  Railway. 

Note  2.— Mr.  Cochran  is  the  general  freight  agent  of  the  Atlantic  and  Great  Western 
Railroad. 

No  changes  have  been  made  in  the  divisions  referred  to  by  Receiver  Devereux 
since  the  date  of  the  above  letter,  except  those  that  are  in  favor  of  the  Atlantic  and 
Great  Western  Railroad.  G.  R.  Blanchard. 


